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    Determining Eliminating Entries (Power Corporation)

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    Please assist with the following problem. Thank you.

    Power Corporation acquired 75 percent of Best Company's ownership on January 1, 20X8, for $96,000. At that date, the fair value of Best's buildings and equipment was $20,000 more than book value. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, the management of Power concluded at December 31, 20X8, that goodwill involved in its purchase of Best shares had been impaired and the correct carrying value was $2,500. No additional impairment occurred in 20X9.

    >> Please see attachment for trial balance data for Power and Best on December 31, 20X9. <<

    Required:
    a. Give all eliminating entries (1-5 below) needed to prepare a three-part consolidation work paper as of December 31, 20X9.

    (1) Eliminate income from subsidiary.
    (2) Assign income to non-controlling interest.
    (3) Eliminate beginning investment balance.
    (4) Assign beginning differential.
    (5) Amortize differential.

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    Power Corporation acquired 75 percent of Best Company's ownership on January 1, 20X8, for $96,000. At that date, the fair value of Best's buildings and equipment was $20,000 more than book value. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, the management of Power concluded at December 31, 20X8, that goodwill involved in its purchase of Best shares had been impaired and the correct carrying value was $2,500. No additional impairment occurred
    in 20X9. Trial balance data for Power and Best on December 31, 20X9, are as follows:

    Power Corporation Best Company
    Item Debit Credit Debit Credit
    Cash 68,500 32,000
    Accounts Receivable 85,000 14,000 ...

    Solution Summary

    The solution examines determining eliminating entries for a power corporation.

    $2.19

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