b. Safeco reported net income of $1,600,000 and declared and paid dividends of $800,000 in 2024. There was no further goodwill impairment. Prepare the journal entries recorded by Peerless in 2024 to apply the complete equity method.Enter numerical answers using all zeros (do not abbreviate in thousands or in millions).CreditDescriptionInvestment in SafecoEquity in net income of SafecoTo record equity in net income.CashRef.Description(C) Equity in net income of SafecoDividends-SafecoInvestment in Safeco(E) Stockholders' equity-SafecoInvestment in Safeco(R) GoodwillEquipment, netInvestment in Safeco(O) Equipment, net♦ ✔♦ ✓Investment in SafecoTo record dividends received.Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2024.Enter numerical answers using all zeros (do not abbreviate in thousands or in millions).Depreciation expense++◆◆Debit800,000 x0✔◆◆800,000 ✓0✔✓0✓3,200,000 *✓✔0✔800,000 ✓Debit8,000,000 x0 ✓0✔0 x0✔300,000 x0 ✓0✔100,000 ✓0✔Credit0✔800,000 ✓1,100,000 x0✔0 x0✔400,000 ✓650,000 x0 ✓100,000 ✓ Eliminating Entries After First and Second YearsDuring 2023, Peerless Company's wholly-owned subsidiary, Safeco Inc. reported net income of $2,100,000 anddeclared and paid dividends of $800,000. Peerless acquired Safeco on January 2, 2023, at a cash cost of $10,000,000,which was $6,000,000 in excess of the book value of net assets acquired. Safeco's equipment (5-year life) wasovervalued by $500,000. Its inventory, reported using FIFO, was overvalued by $200,000. The remaining excess ofacquisition cost over book value was attributed to goodwill. Impairment testing indicates that goodwill was impaired by$100,000 during 2023. Safeco's date of acquisition inventory was sold during 2023.

Eliminating entries are used in the consolidation workpaper to adjust the totals of the individual…

Eliminating Entries After First and Second Years During 2023, Peerless Company's wholly-owned subsidiary, Safeco Inc. reported net income of $2,100,000 and declared and paid dividends of $800,000. Peerless acquired Safeco on January 2, 2023, at a cash cost of $10,000,000, which was $6,000,000 in excess of the book value of net assets acquired. Safeco's equipment (5-year life) was overvalued by $500,000. Its inventory, reported using FIFO, was overvalued by $200,000. The remaining excess of acquisition cost over book value was attributed to goodwill. Impairment testing indicates that goodwill was impaired by $100,000 during 2023. Safeco's date of acquisition inventory was sold during 2023.

Eliminating Entries After First and Second Years During 2023, Peerless Company's wholly-owned subsidiary, Safeco Inc. reported net income of $2,100,000 and declared and paid dividends of $800,000. Peerless acquired Safeco on January 2, 2023, at a cash cost of $10,000,000, which was $6,000,000 in excess of the book value of net assets acquired. Safeco's equipment (5-year life) was overvalued by $500,000. Its inventory, reported using FIFO, was overvalued by $200,000. The remaining excess of acquisition cost over book value was attributed to goodwill. Impairment testing indicates that goodwill was impaired by $100,000 during 2023. Safeco's date of acquisition inventory was sold during 2023.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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