In 2017 Snoop Corp. Acquired 100% Paren common stocks for $350,000 when the book value of of Paren net assets was $300,000 (CS $200,000 and RE $100,000). At the date of combination all assets and liabilities fair value was equal the book value except equipment the fair value was $35,000 above the book value and the remaining useful life is 7 years. Any additional differences is attributed to good will. Paren company reported net income $80,000 in 2017 and $70,000 in 2018 and paid dividends $30,000 for each year. No impairment loss in 2017 while the impairment loss in 2018 was $4,000. The section of assets in statement of financial position on Dec.31, 2018 for both companies were:

Snoop Paren Elimination Consolidated

Dr Cr Statement

Cash $120,000 $50,000

A/R $80,000 $40,000

Land $100,000 $70,000

Equipment $250,000 $100,000

Acc. Dep. ($50,000) ($20,000)

Investment in S

Good Will

Additional Information

1. During 2017 and 2018 no additional commons stocks were issued

2. During 2018 Snoop owned Paren $10,000, the balance of debt is still unpaid on Dec.31, 2018

Required:

1. Prepare the required entries in Snoop books related to their investment in Paren on Dec.31, 2018 using Fully Adjusted Equity Method

2. Compute the ending balance of investment in S (Paren ) and Goodwill, both companies and consolidated at Dec.31, 2018

3. Prepare the required elimination entries in 2018

4. Complete the section of assets in consolidated balance sheet showed above

Answer rating: 100% (QA)

1 The required entries at the end of 2018 are as follows Snoop Corp Investment i... View the full answer