On December 31, 2020, Parent company (A) acquired 80% of Subsidiary (B) outstanding commonstocks for SR 368,000, Subsidiary's fair value of net asserts was SR 460,000. During 2021, subsidiarynet income and dividends declared were 100,000 and 50,000 respectively. Begging balance forAccumulated depreciation of subsidiary's equipment amounted to SR 50,000. Parent uses non-pushdown accounting and equity method .Subsidiary's fair value of net assets were as followsBook Value ElementAmountin SRCommon Stock150,000Retained Earning120,000Total270,000Under -Or Over ValuationInventory(10,000)2 MonthsLand50,000No Useful LifeEquipment100,0004 YearsTotal Under -Or Over Valuation140,000Good Will50,000No Useful LifeTotal Under -Or Over Valuation490,000Required:Pass journal entries to record the depreciation elimination entry if accumulated depreciation accountbased on book value of assets is 25,000.

Introduction An asset loses value over time as a result of usage, damage, or obsolescence. The term…

On December 31, 2020, Parent company (A) acquired 80% of Subsidiary (B) outstanding common stocks for SR 368,000, Subsidiary's fair value of net asserts was SR 460,000. During 2021, subsidiary net income and dividends declared were 100,000 and 50,000 respectively. Begging balance for Accumulated depreciation of subsidiary's equipment amounted to SR 50,000. Parent uses non- pushdown accounting and equity method .Subsidiary's fair value of net assets were as follows Book Value Element Common Stock Retained Earning Total Under-Or Over Valuation Inventory Land Equipment Total Under-Or Over Valuation Good Will Total Under-Or Over Valuation Amount in SR 150,000 120,000 (10,000) 50,000 100,000 270,000 140,000 50,000 490,000 2 Months No Useful Life 4 Years No Useful Life Required: Pass journal entries to record the depreciation elimination entry if accumulated depreciation account based on book value of assets is 25,000.

On December 31, 2020, Parent company (A) acquired 80% of Subsidiary (B) outstanding common stocks for SR 368,000, Subsidiary's fair value of net asserts was SR 460,000. During 2021, subsidiary net income and dividends declared were 100,000 and 50,000 respectively. Begging balance for Accumulated depreciation of subsidiary's equipment amounted to SR 50,000. Parent uses non- pushdown accounting and equity method .Subsidiary's fair value of net assets were as follows Book Value Element Common Stock Retained Earning Total Under-Or Over Valuation Inventory Land Equipment Total Under-Or Over Valuation Good Will Total Under-Or Over Valuation Amount in SR 150,000 120,000 (10,000) 50,000 100,000 270,000 140,000 50,000 490,000 2 Months No Useful Life 4 Years No Useful Life Required: Pass journal entries to record the depreciation elimination entry if accumulated depreciation account based on book value of assets is 25,000.

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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