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Sawmill Corporation reported retained earnings of $100,000 at the date of acquisition. The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of 10 years from the date of acquisition. Sawmill's accumulated depreciation on the acquisition date was $25,000. At December 31, 20X4, Sawmill owed Powder $2,500. Required: Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.

Sawmill Corporation reported retained earnings of $100,000 at the date of acquisition. The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of 10 years from the date of acquisition. Sawmill's accumulated depreciation on the acquisition date was $25,000. At December 31, 20X4, Sawmill owed Powder $2,500. Required: Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.

FINANCIAL ACCOUNTING
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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Powder Company spent $240,000 to acquire all of Sawmill Corporation's stock on January 1, 20X2. On December 31, 20X4, the trial balances of the two companies were as follows: Item Cash Accounts Receivable Land Buildings and Equipment Investment in Sawmill Corporation Cost of Services Provided Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Taxes Payable Notes Payable Common Stock Retained Earnings Service Revenue Income from Sawmill Corporation Powder Company Debit $ 74,000 130,000 60,000 500,000 268,000 470,000 35,000 57,000 30,000 $ 1,624,000 Credit $ 265,000 71,000 58,000 100,000 200,000 292,000 610,000 28,000 $ 1,624,000 Credit Sawmill Corporation Debit $ 42,000 53,000 50,000 350,000 130,000 18,000 60,000 12,000 $ 715,000 $ 93,000 17,000 60,000 85,000 100,000 120,000 240,000 $ 715,000 Sawmill Corporation reported retained earnings of $100,000 at the date of acquisition. The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of 10 years from the date of acquisition. Sawmill's accumulated depreciation on the acquisition date was $25,000. At December 31, 20X4, Sawmill owed Powder $2,500. Required: Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.
Transcribed Image Text:Powder Company spent $240,000 to acquire all of Sawmill Corporation's stock on January 1, 20X2. On December 31, 20X4, the trial balances of the two companies were as follows: Item Cash Accounts Receivable Land Buildings and Equipment Investment in Sawmill Corporation Cost of Services Provided Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Taxes Payable Notes Payable Common Stock Retained Earnings Service Revenue Income from Sawmill Corporation Powder Company Debit $ 74,000 130,000 60,000 500,000 268,000 470,000 35,000 57,000 30,000 $ 1,624,000 Credit $ 265,000 71,000 58,000 100,000 200,000 292,000 610,000 28,000 $ 1,624,000 Credit Sawmill Corporation Debit $ 42,000 53,000 50,000 350,000 130,000 18,000 60,000 12,000 $ 715,000 $ 93,000 17,000 60,000 85,000 100,000 120,000 240,000 $ 715,000 Sawmill Corporation reported retained earnings of $100,000 at the date of acquisition. The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of 10 years from the date of acquisition. Sawmill's accumulated depreciation on the acquisition date was $25,000. At December 31, 20X4, Sawmill owed Powder $2,500. Required: Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.
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