Eliminating Entries After First and Second Years During 2023, Peerless Company's wholly-owned subsidiary, Safeco Inc. reported...
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Eliminating Entries After First and Second Years During 2023, Peerless Company's wholly-owned subsidiary, Safeco Inc. reported net income of $2,100,000 and declared and paid dividends of $800,000. Peerless acquired Safeco on January 2, 2023, at a cash cost of $10,000,000, which was $6,000,000 in excess of the book value of net assets acquired. Safeco's equipment (5-year life) was overvalued by $500,000. Its inventory, reported using FIFO, was overvalued by $200,000. The remaining excess of acquisition cost over book value was attributed to goodwill. Impairment testing indicates that goodwill was impaired by $100,000 during 2023. Safeco's date of acquisition inventory was sold during 2023. Required a. Prepare the journal entries recorded by Peerless in 2023 to record the acquisition and apply the complete equity method. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Description Investment in Safeco Debit 10,000,000 Credit 0 Cash 0 10,000,000 To record acquisition of Safeco. Investment in Safeco 2,300,000 Equity in net income of Safeco 0 0 2,300,000 To record equity in net income. Cash Investment in Safeco To record dividends received. 800,000 0 0 800,000 Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2023. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Ref. Description (C) Equity in net income of Safeco Debit 2,300,000 Credit 0 Dividends-Safeco Investment in Safeco (E) Stockholders' equity-Safeco Investment in Safeco 0 0 4,000,000 0 800,000 1,500,000 0 (R) Goodwill = 6,700,000 4,000,000 0 Inventory 0 200,000 Equipment, net 0 500,000 Investment in Safeco 0 6,000,000 (O) Equipment, net 100,000 0 Goodwill impairment loss 100,000 0 Inventory 200,000 0 Depreciation expense 0 100,000 Goodwill 0 100,000 Cost of goods sold = 0 200,000 b. Safeco reported net income of $1,600,000 and declared and paid dividends of $800,000 in 2024. There was no further goodwill impairment. Prepare the journal entries recorded by Peerless in 2024 to apply the complete equity method. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Description Debit Credit Investment in Safeco Equity in net income of Safeco 1,700,000 0 0 1,700,000 To record equity in net income. Cash Investment in Safeco 800,000 0 0 800,000 To record dividends received. Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2024. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Ref. Description Debit Credit (C) Equity in net income of Safeco 1,700,000 0 Dividends-Safeco = Investment in Safeco (E) Stockholders' equity-Safeco = Investment in Safeco (R) Goodwill Equipment, net Investment in Safeco (O) Equipment, net 0 0 5,300,000 0 4,500,000 x 0 0 100,000 800,000 900,000 0 5,300,000 0 400,000 4,700,000 x Depreciation expense 0 0 100,000 Eliminating Entries After First and Second Years During 2023, Peerless Company's wholly-owned subsidiary, Safeco Inc. reported net income of $2,100,000 and declared and paid dividends of $800,000. Peerless acquired Safeco on January 2, 2023, at a cash cost of $10,000,000, which was $6,000,000 in excess of the book value of net assets acquired. Safeco's equipment (5-year life) was overvalued by $500,000. Its inventory, reported using FIFO, was overvalued by $200,000. The remaining excess of acquisition cost over book value was attributed to goodwill. Impairment testing indicates that goodwill was impaired by $100,000 during 2023. Safeco's date of acquisition inventory was sold during 2023. Required a. Prepare the journal entries recorded by Peerless in 2023 to record the acquisition and apply the complete equity method. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Description Investment in Safeco Debit 10,000,000 Credit 0 Cash 0 10,000,000 To record acquisition of Safeco. Investment in Safeco 2,300,000 Equity in net income of Safeco 0 0 2,300,000 To record equity in net income. Cash Investment in Safeco To record dividends received. 800,000 0 0 800,000 Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2023. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Ref. Description (C) Equity in net income of Safeco Debit 2,300,000 Credit 0 Dividends-Safeco Investment in Safeco (E) Stockholders' equity-Safeco Investment in Safeco 0 0 4,000,000 0 800,000 1,500,000 0 (R) Goodwill = 6,700,000 4,000,000 0 Inventory 0 200,000 Equipment, net 0 500,000 Investment in Safeco 0 6,000,000 (O) Equipment, net 100,000 0 Goodwill impairment loss 100,000 0 Inventory 200,000 0 Depreciation expense 0 100,000 Goodwill 0 100,000 Cost of goods sold = 0 200,000 b. Safeco reported net income of $1,600,000 and declared and paid dividends of $800,000 in 2024. There was no further goodwill impairment. Prepare the journal entries recorded by Peerless in 2024 to apply the complete equity method. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Description Debit Credit Investment in Safeco Equity in net income of Safeco 1,700,000 0 0 1,700,000 To record equity in net income. Cash Investment in Safeco 800,000 0 0 800,000 To record dividends received. Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2024. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Ref. Description Debit Credit (C) Equity in net income of Safeco 1,700,000 0 Dividends-Safeco = Investment in Safeco (E) Stockholders' equity-Safeco = Investment in Safeco (R) Goodwill Equipment, net Investment in Safeco (O) Equipment, net 0 0 5,300,000 0 4,500,000 x 0 0 100,000 800,000 900,000 0 5,300,000 0 400,000 4,700,000 x Depreciation expense 0 0 100,000
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Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
Posted Date:
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