n January 1, 20x8, Ramon Corporation acquired 75 percent of Tester Company\'s vo
ID: 2511091 • Letter: N
Question
n January 1, 20x8, Ramon Corporation acquired 75 percent of Tester Company's voting common stock for $300,000. At the time of the combination, Tester reported common stock outstanding of $200,000 and retained earnings of $150,000, and the fair value of the noncontrolling interest was $100,000. The book value of Tester's net assets approximated market value except for patents that had a market value of $50,000 more than their book value. The patents had a remaining economic life of ten years at the date of the business combination. Tester reported net income of $40,000 and paid dividends of $10,000 during 20X8. REQUIRED Give all eliminating entries required on December 31, 20x8, to prepare consolidated financial statements. (optional depreciation entry not required)Explanation / Answer
There shall be 2 elimination entries:
1. Investment of $300,000 made by Ramon Corporation should be eliminated
2. Dividends received by Ramon corporation of $7500 (10000*75%)
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