Question: Using the data presented in E5-11, prepare a solution assuming the business combination occurred prior to the effective date of FASB 141R. Data From in

Using the data presented in E5-11, prepare a solution assuming the business combination occurred prior to the effective date of FASB 141R.

Data From in E5-11

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 greater 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 eliminating entries needed at December 31, 20X3, to prepare consolidated financial statements.

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