On January 1, 2018, Pearson Company acquired all of Sundisk Company's voting stock for $20,000 in cash. Sundisk's total shareholders'equity at January 1, 2018 was $5,000. Some of Sundisk's assets and liabilities at the date of acquisition had fair values that were differentfrom reported values, as follows:Book ValueFair ValuePlant assets, net (10 years, straight-line)$15,000$ 10,000Identifiable intangibles (indefinite life)9,000It is now December 31, 2020 (3 years later). Impairment of recognized identifiable intangibles totals $400 for 2018 and 2019, and there isno impairment in 2020. There is no goodwill impairment as of the beginning of 2020, but goodwill impairment for 2020 is $1,200. Pearsonuses the complete equity method to account for its investment. December 31, 2020 trial balances for Pearson and Sundisk follow:PearsonSundiskDr (Cr)Dr (Cr)Current assets$ 5,000$ 2,500Plant assets, net28,70022,000Identifiable intangiblesInvestment in Sundisk28,400GoodwillLiabilities(20,300)(11,000)Capital stockRetained earnings, beginning(15,000)(2,000)(25,000)(10,000)Sales revenue(25,000)(14,000)Equity in net income of Sundisk(800)Cost of goods soldOperating expenses20,0004,0009,0003,500$0.$40. The following relates to consolidation eliminating entries for 2020.Eliminating entry (R):Select one:A. Debits plant assets, net $5,000B. Debits intangibles $8,000C. Debits intangibles $9,000D. Credits plant assets, net $4,000

The question is related to Consolidated Financial Statements and of eliminating entry. The Assets…

The following relates to consolidation eliminating entries for 2020. Eliminating entry (R): Select one: A. Debits plant assets, net $5,000 B. Debits intangibles $8,000 C. Debits intangibles $9,000 D. Credits plant assets, net $4,000

The following relates to consolidation eliminating entries for 2020. Eliminating entry (R): Select one: A. Debits plant assets, net $5,000 B. Debits intangibles $8,000 C. Debits intangibles $9,000 D. Credits plant assets, net $4,000

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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