Ref. Description (C) Equity in net income of Baker Investment in Baker Debit Credit (E) Shareholders' equity-Baker Investment in Baker (R) Goodwill १ १ १ 0 ☑ 0 0 ✓ 200,000 x 6,300,000 ✔ 0 0 ✓ 6,300,000 33,500,000 ✔ 0 Buildings, net Investment in Baker 0 600,000 × 0 0 × (O) Buildings, net 40,000 0 Goodwill impairment loss 100,000 ✓ 0 Depreciation expense 0 ☑ 40,000 Goodwill 0 100,000
Consolidation after Several Years
On January 1, 2016, Adams Corporation acquired all of the stock of Baker Company. The fair value of Adams’ shares used in the exchange was $37,500,000. At the time of acquisition, the book value of Baker’s shareholders’ equity was $5,000,000, and the book value of Baker’s building (25-year life) exceeded its fair value by $1,000,000. From the date of acquisition to December 31, 2021, Baker had cumulative net income of $1,300,000. For 2022, Baker reported net income of $300,000. Adams uses the complete equity method to account for its investment in Baker. There is no
Required
Prepare the working paper eliminating entries necessary to consolidate the financial statements of Adams and Baker at December 31, 2022.
Enter numerical answers using all zeros (do not abbreviate in thousands or in millions).
| Ref. | Description | Debit | Credit |
| (C) | Equity in Net Income of Baker | UNKNOWN | 0 |
| (C) |
Investment in Baker |
0 | UNKNOWN |
| (E) | Shareholders' Equity - Baker | 6300000 | 0 |
| (E) |
Investment in Baker |
0 | 6300000 |
| (R) | Goodwill | 33500000 | 0 |
| (R) |
Buildings, net |
0 | UNKNOWN |
| (R) |
Investment in Baker |
0 | UNKNOWN |
| (O) | Buildings, net | 40000 | 0 |
| (O) | Goodwill impairment loss | 100000 | 0 |
| (O) |
|
0 | 40000 |
| (O) |
Goodwill |
0 | 100000 |
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