Consolidation Project
Book values approximated fair values except for:
Book
Value
Fair
Value
Land
$50,000
$60,000
Inventory
80,000
88,000
Equipment
200,000
180,000
Bonds Payable
500,000
525,000
Inventory is costed by the FIFO method, the equipment has a 10-year remaining life, and the bonds mature in 5 years.
Company S reported the following income and dividend distributions:
Net
Income
Dividends
20×1
$100,000
$20,000
20×2
$160,000
$20,000
Company P accounts for the investment using the Complete Equity Method.
Required: Prepare the December 31, 20×2 elimination entries in journal form and complete the attached worksheet.