Consolidation after One Year of Ownership
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Steadry Corporation purchased 80 percent of Lowe Corporation's stock on January 1, 20X2. At that date Lowe reported retained earnings of $80,000 and had $120,000 of stock outstanding. The fair value of its equipment and buildings was $32,000 more than the book value. Steadry paid $190,000 to acquire the Lowe shares. The remaining economic life for all Lowe's depreciable assets was eight years on the date of combination. The amount of the differential assigned to goodwill is not amortized. Lowe reported net income of $40,000 in 20X2 and declared no dividends.
a. Give the eliminating entries needed to prepare a consolidated balance sheet immediately after Steadry purchased Lowe stock.
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