In class exercise_Chapter 3

In class exercise_Chapter 3 - Chapter 3 Illustration...

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Consolidation subsequent to the date of acquisition Pride Corp. paid $3.2 million for the voting common stock of Side Corporation on January 1, 2011. The purchase price consisted of 100,000 shares of Pride Inc. common stock ($10 par) with a market value of $2 million ($20 per share) plus $1,200,000 cash. Side Corp’s buildings and equipment both have a useful life of 10 years. In addition, Pride paid $50,000 for registering and issuing the 100,000 shares of common stock and $100,000 for other direct costs of combination (e.g., payments to accountants, attorneys, and investment bankers) For the year 2011, Side Corp reports net income of $ 260,000 and pays cash dividends of $50,000 on September 1. Side’s beginning inventory is all replenished and used up in the production in 2011. Requirement 1. If the parent uses the full equity method, show all necessary journal entries to adjust the investment balance in 2011. 2.
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In class exercise_Chapter 3 - Chapter 3 Illustration...

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