Jefferson Company acquired all of Louis Corporation’s common shares on January 2, 20X3, for $789,000. At the date of combination, Louis’s balance sheet appeared as follows:

The fair values of all of Louis's assets and liabilities were equal to their book values except for its fixed assets. Louis's land had a fair value of $75,000; the buildings, a fair value of $300,000; and the equipment, a fair value of $340,000. Jefferson Company decided to employ push-down accounting for the acquisition of Louis Corporation. Subsequent to the combination, Louis continued to operate as a separate company.

a. Record the acquisition of Louis's stock on Jefferson's books.
b. Present any entries that would be made on Louis's books related to the business combination, assuming push-down accounting is used.
c. Present, in general journal form, all elimination entries that would appear in a consolidation worksheet for Jefferson and its subsidiary prepared immediately following thecombination.

  • CreatedMay 23, 2014
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