amazon report amazon report amazon report On September 5.2006 Soy Company, the 8
ID: 2597258 • Letter: A
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amazon report amazon report amazon report On September 5.2006 Soy Company, the 80%-owned subsidiary of pro corporation, declared a cash dividend of S1 a share on its 100,000 outstanding shares of S1 par common stock. The dividend was paid on September 26, 2006. For the fiscal year ended September 30, 2006, the first year of the pro-soy affiliation, soy had a net income of S300,000. In addition to goodwil of $80,000, the September 30, 2005 (date of the business combination) working paper elimination (in journal entry format) for Pro Corporation and subsidiary include the following debits: Inventories (first-in, first-out) soy S60,000 Plant assets (net) (all depreciable over a 10-year economic life, straight-line S80,000 method-soy Instruction Prepare journal entries for Pro Corporation on September 30, 2006, to record its equity method of accounting for the operating results of Soy Company. Use the straight-line method of amortization for discount on long-term debt, and disregard income taxes. Consolidated goodwl was unimpaired as of September 30, 2006.Explanation / Answer
Account Debit Credit Investment in Soy 240000 Equity in earnings of soy 240000 [share of net income 300000*80%] Cash 80000 Investment in Soy 80000 [share of dividends received] Equity in earnings of soy 8000 Investment in Soy 8000 [Amortisation of plant assets 80000/10]
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