To think critically about: Effect of interactive communication between companies and customers on traditional advertising. Introduction: When organizations communicate with the customers through paid media platforms, this is known as advertisements.

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EXERCISE 3-5 Treasury Stock Held by Subsidiary LO 8Pool Company purchased 90% of the outstanding common stock of Spruce Company on December31, 2019, for cash. At that time the balance sheet of Spruce Company was as follows:Current assets $1,050,000Plant and equipment 990,000Land 170,000Total assets $2,210,000Liabilities $ 820,000Common stock, $20 par value 900,000Other contributed capital 440,000Retained earnings 150,000Total 2,310,000Less treasury stock at cost, 5,000 shares 100,000Total equities $2,210,000Required:Prepare the elimination entry required for the preparation of a consolidated balance sheet workpaper on December 31, 2019, assuming:(1) The purchase price of the stock was $1,400,000. Assume that any difference between thebook value of net assets and the value implied by the purchase price relates to subsidiary land.(2) The purchase price of the stock was $1,160,000. Assume that the subsidiary land has a fairvalue of $180,000, and the other assets and liabilities are…

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Chapter 16, Problem 3CT

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To think critically about: Effect of interactive communication between companies and customers on traditional advertising.

Introduction: When organizations communicate with the customers through paid media platforms, this is known as advertisements.

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EXERCISE 3-5 Treasury Stock Held by Subsidiary LO 8Pool Company purchased 90% of the outstanding common stock of Spruce Company on December31, 2019, for cash. At that time the balance sheet of Spruce Company was as follows:Current assets $1,050,000Plant and equipment 990,000Land 170,000Total assets $2,210,000Liabilities $ 820,000Common stock, $20 par value 900,000Other contributed capital 440,000Retained earnings 150,000Total 2,310,000Less treasury stock at cost, 5,000 shares 100,000Total equities $2,210,000Required:Prepare the elimination entry required for the preparation of a consolidated balance sheet workpaper on December 31, 2019, assuming:(1) The purchase price of the stock was $1,400,000. Assume that any difference between thebook value of net assets and the value implied by the purchase price relates to subsidiary land.(2) The purchase price of the stock was $1,160,000. Assume that the subsidiary land has a fairvalue of $180,000, and the other assets and liabilities are…

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