On December 31, 2020, Parent company (A) acquired 80% of Subsidiary (B) outstanding common stocks for...

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On December 31, 2020, Parent company (A) acquired 80% of Subsidiary (B) outstanding common stocks for SR 368,000, Subsidiary's fair value of net asserts was SR 460,000. During 2021, subsidiary net income and dividends declared were 100,000 and 50,000 respectively. Begging balance for Accumulated depreciation of subsidiary's equipment amounted to SR 50,000. Parent uses non-pushdown accounting and equity method .Subsidiary's fair value of net assets were as follows (5 marks) Book Value Element Common Stock Retained Earning Total Under -Or Over Valuation Inventory Land Equipment Total Under -Or Over Valuation Good Will Total Under -Or Over Valuation Amount in SR 150,000 120,000 (10,000 ) 50,000 100,000 270,000 140,000 50,000 490,000 2 Months No Useful Life 4 Years No Useful Life Required: 1. Pass journal entries to record basic elimination entries. 2. Pass journal entries to record the excess value reclassification entry 3. Pass journal entries to record the amortized excess value reclassification entry 4. Pass journal entries to record the depreciation elimination entry if accumulated depreciation account based on book value of assets is 25,000. On December 31, 2020, Parent company (A) acquired 80% of Subsidiary (B) outstanding common stocks for SR 368,000, Subsidiary's fair value of net asserts was SR 460,000. During 2021, subsidiary net income and dividends declared were 100,000 and 50,000 respectively. Begging balance for Accumulated depreciation of subsidiary's equipment amounted to SR 50,000. Parent uses non-pushdown accounting and equity method .Subsidiary's fair value of net assets were as follows (5 marks) Book Value Element Common Stock Retained Earning Total Under -Or Over Valuation Inventory Land Equipment Total Under -Or Over Valuation Good Will Total Under -Or Over Valuation Amount in SR 150,000 120,000 (10,000 ) 50,000 100,000 270,000 140,000 50,000 490,000 2 Months No Useful Life 4 Years No Useful Life Required: 1. Pass journal entries to record basic elimination entries. 2. Pass journal entries to record the excess value reclassification entry 3. Pass journal entries to record the amortized excess value reclassification entry 4. Pass journal entries to record the depreciation elimination entry if accumulated depreciation account based on book value of assets is 25,000.

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