Stick Corporation is a wholly owned subsidiary of Point Corporation. Point acquired ownership of Stick on January 1, 20X3, for $28,000 above Stick’s reported net assets. At that date, Stick reported common stock outstanding of $60,000 and retained earnings of $90,000. The differential is assigned to equipment with an economic life of seven years at the date of the business combination. Stick reported net income of $30,000 and paid dividends of $12,000 in 20X3.

Required

a. Give the journal entries recorded by Point Corporation during 20X3 on its books if Point accounts for its investment in Stick using the equity method.

b. Give the consolidation entries needed at December 31, 20X3, to prepare consolidated financial statements.