Consolidation After Several Years Using Cost Method

Data for PlanetTwo Communications and its wholly$-$owned subsidiary, Stage $4$ Networks, are given below. PlanetTwo acquired Stage $4$ on January $1,2020.$ PlanetTwo uses the cost method to report its investment in Stage $4,$ and its accounting year ends December $31.$

$($in thousands$)$

Acquisition cost $$37,500$

Stage $4$s shareholders$$ equity, January $1,20209,000$

Stage $4$s total reported net income, $2020202316,500$

Stage $4$s total dividends paid, $202020236,000$

Stage $4$s reported net income, $2024750$

Dividends declared and paid by Stage $4,2024300$

Allocation of excess of cost over book value to identi$$able net assets, at acquisition date $($fair value $$ book value$)$:

Land $1,200$

Buildings $(15-$year life, straight$-$line$)(2,250)$

Identi$$able intangibles $(4-$year life$)3,000$

Long$-$term debt premium $(5$ years to maturity as of January $1,2020)150$

Goodwill impairment loss, $20202023450$

Goodwill impairment loss, $20240$

Required

Note: Provide all answers in thousands.

a$.$ Prepare PlanetTwo$$s journal entry or entries during $2024$ to report its investment in Stage $4$ Networks, on its own books.

Note: If no entry is required, select $"$N$/$A $-$ no debit entry is required" and $"$N$/$A $-$ no credit entry is required" as your answers.

Debit Credit

$0$

$0$

Answer $1$

$0$

$0$

Answer $2$

To record receipt of dividends from Stage $4$

$0$

$0$

Answer $3$

$0$

$0$

Answer $4$

To record PlanetTwo$$s share of Stage$4$s net income

b$.$ Prepare the working paper eliminating entries necessary to consolidate the accounts of PlanetTwo Communications and Stage $4$ Networks at December $31,2024.$

Debit Credit

$($C$)$

$0$

$0$

Answer $5$

$0$

$0$

Answer $6$

To eliminate parent's dividend income balance

$($A$)$

$0$

$0$

Answer $7$

$0$

$0$

Answer $8$

To adjust parent's accounts as if partent used equity method

$($E$)$

$0$

$0$

Answer $9$

$0$

$0$

Answer $10$

To eliminate subsidiary's equity account balances

$($R$)$

$0$

$0$

Answer $11$

$0$

$0$

Answer $12$

$0$

$0$

Answer $13$

$0$

$0$

Answer $14$

$0$

$0$

Answer $15$

To recognize fair value revaluations

$($O$)$

$0$

$0$

Answer $16$

$0$

$0$

Answer $17$

$0$

$0$

Answer $18$

$0$

$0$

Answer $19$

To recognize revaluation write$-$offs