1. P Co. purchased 60% of the S Co. for $720,000 on 1/11/16. S Co. had $400,000
ID: 2592523 • Letter: 1
Question
1. P Co. purchased 60% of the S Co. for $720,000 on 1/11/16. S Co. had $400,000 of common stock and $200,000 of retained earning on that date. The following values were determinded for the S Co. on the date of purchase.
Inventory (book value) $80,000 . (fair value) $100,000
Land . (bv) $700,000 (fv)$900,000
Equipment (bv) $500,000 . (fv)$550,000
Prepare the 1/11/16 workpaper entries to eliminate the investment account and to allocate the difference between the cost and book value.
2. Referring to the problem above, if the equipment has a remaining life of 4 years, preapre the workpaper entry to allocate the difference between cost and book value for each of 12/31/16 and 12/31/17. Be sure to lable the years.
Explanation / Answer
As per General Provident Fund (Central Services) Rules, 1960, all temporary Government servants after a continuous service of one year, all re-employed pensioners (Other than those eligible for admission to the Contributory Provident Fund) and all permanent Government servants are eligible to subscribe to the Fund. A subscriber, at the time of joining the fund is required to make a nomination, in the prescribed form, conferring on one or more persons the right to receive the amount that may stand to his credit in the fund in the event of his death, before that amount has become payable or having become payable has not been paid. A subscriber shall subscribe monthly to the Fund except during the period when he is under suspension. Subscriptions to the Provident Fund are stopped 3 months prior to the date of superannuation. Rates of subscription shall not be less than 6% of subscribers emoluments and not more than his total emoluments. Rate of interest varies according to notifications of the Government issued from time to time. The Rules provide for drawal of advances/ withdrawals from the Fund for specific purposes.
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