Canton Corporation is a majority-owned subsidiary of West Corporation. West acquired 75 percent ownership on January 1,

Question:

Canton Corporation is a majority-owned subsidiary of West Corporation. West acquired 75 percent ownership on January 1, 20X3, for $133,500. At that date, Canton reported common stock outstanding of $60,000 and retained earnings of $90,000, and the fair value of the noncontrolling interest was $44,500. The differential is assigned to equipment, which had a fair value $28,000 more than book value and a remaining economic life of seven years at the date of the business combination Canton reported net income of $30,000 and paid dividends of $12,000 in 20X3.

Required

a. Give the journal entries recorded by West during 20X3 on its books if it accounts for its investment in Canton using the equity method.

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

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...