In its 20X7 consolidated income statement , Bower Development Company reported consolidated net income of $961,000 and
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Bower had acquired 70 percent of the voting shares of Subsidence eight years earlier when the fair value of its net assets was $200,000 higher than book value, and the fair value of the noncontrolling interest was $60,000 more than a proportionate share of the book value of Subsidence's net assets. All the excess over the book value was attributable to intangible assets with a remaining life of 10 years from the date of combination. Both parent and subsidiary use straight-line amortization and depreciation. Assume Bower uses the fully adjusted equity method.
Required
a. Present the journal entry made by Bower to record the sale of equipment in 20X6 to Subsidence.
b. Present all elimination entries related to the intercompany transfers of land and equipment that should appear in the consolidation worksheet used to prepare a complete set of consolidated financial statements for 20X7.
c. Compute Subsidence's 20X7 reported net income.
d. Compute Bower's 20X7 income from its own separate operations, excluding any investment income from its investment in Subsidence Mining.
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Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
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