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Question : 13) On January 1, 2011, Jeff Company acquired a 90%

13) On January 1, 2011, Jeff Company acquired a 90% interest in Marian Company for $198,000 cash. On January 1, 2011, Marian Company had the following assets and liabilities:

Book ValueFair Value

Cash$5,000$5,000

Accounts Receivable30,00035,000

Inventory40,00050,000

Plant Assets60,00080,000

Total Assets$135,000$170,000

Liabilities$25,000$25,000

Capital Stock100,000

Retained Earnings10,000

Total Liabilities &

Stockholders' Equity $135,000

Push-down accounting is used for the acquisition.

Required:

1. Assume both companies use the entity theory. Prepare the elimination entry(ies) on consolidating work papers on January 1, 2011.

2. Assume both companies use the parent company theory. Prepare the elimination entry(ies) on consolidating work papers on January 1, 2011.

14) On January 1, 2011, Jennifer Company acquired a 90% interest in Jayda Company for $270,000 cash. On January 1, 2011, Jayda Company had the following assets and liabilities:

Book ValueFair Value

Cash$10,000$10,000

Accounts Receivable50,00070,000

Inventory50,00080,000

Plant Assets100,000200,000

Total Assets$210,000$360,000

Liabilities$100,000$120,000

Capital Stock100,000

Retained Earnings10,000

Total Liabilities &

Stockholders' Equity$210,000

Push-down accounting is used for the acquisition. Both companies use the entity theory.

Required:

1. What is the goodwill associated with Jayda Company on January 1, 2011?

2. Prepare the journal entry(ies) on Jayda's books on January 1, 2011.

3. Prepare the journal entry(ies) on Jennifer's books on January 1, 2011.

4. Prepare the elimination entry(ies) on the consolidating working papers on January 1, 2011.

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