Required: Prepare All Elimination Entries on Dec.31, 2021 and on Dec.31, 2022

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On January 1, 2021, Khanyounis Corporation acquired 80% of Rafah Corporation common stock by $120,000. The fair value of the
noncontrolling interest at January 1, 2021, was $30,000, and book value of Rafah's net assets was $150,000 (CS: $100,000 and RE:
$50,000). The book values and fair values of Rafah's assets and liabilities were equal.
On Jan 1, 2021 Rafah issued $100,000 par value 8%, 10-year bonds.
Khanyounis Corp. invested $50,000 to acquire half of these bonds directly from Rafah on that date while remaing bonds were
sold to unaffiliate party. Interest payments are made on June 30 and Dec.31.
On Dec 31, 2021 Khanyounis Purchased remaingRafah's bonds from unaffiliate parties by $53,297.42 when Effective (market)
interest rate 7%
• Rafah reported net income of $100,000 in 2021 and $120,000 in 2022
Required: Prepare All Elimination Entries on Dec.31, 2021 and on Dec.31, 2022
-
C
•
Transcribed Image Text:On January 1, 2021, Khanyounis Corporation acquired 80% of Rafah Corporation common stock by $120,000. The fair value of the noncontrolling interest at January 1, 2021, was $30,000, and book value of Rafah's net assets was $150,000 (CS: $100,000 and RE: $50,000). The book values and fair values of Rafah's assets and liabilities were equal. On Jan 1, 2021 Rafah issued $100,000 par value 8%, 10-year bonds. Khanyounis Corp. invested $50,000 to acquire half of these bonds directly from Rafah on that date while remaing bonds were sold to unaffiliate party. Interest payments are made on June 30 and Dec.31. On Dec 31, 2021 Khanyounis Purchased remaingRafah's bonds from unaffiliate parties by $53,297.42 when Effective (market) interest rate 7% • Rafah reported net income of $100,000 in 2021 and $120,000 in 2022 Required: Prepare All Elimination Entries on Dec.31, 2021 and on Dec.31, 2022 - C •
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