Thompson Company spent $240,000 to acquire all of Lake Corporation’s stock on January 1, 20X2. On December 31, 20X4, the trial balances of the two companies were as follows:

Lake Corporation reported retained earnings of $100,000 at the date of acquisition. The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of 10 years from the date of acquisition. At December 31, 20X4, Lake owed Thompson $2,500 for services provided.

a. Give all journal entries recorded by Thompson with regard to its investment in Lake during 20X4.
b. Give all elimination entries required on December 31, 20X4, to prepare consolidated financial statements.
c. Prepare a three-part consolidation worksheet as of December 31,20X4.

  • CreatedMay 23, 2014
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