P$4-35$ Comprehensive Problem: Wholly Owned Subsidiary

Prime Corporation acquired $100$ percent ownership of Steak Products Company on January $1,20$X$1,$ for $\backslash (\backslash$$ $200,000\backslash ).$ On that date, Steak reported retained earnings of $\backslash (\backslash$$ $50,000\backslash )$ and had $\backslash (\backslash$$ $100,000\backslash )$ of common stock outstanding. Prime has used the equity method in accounting for its investment in Steak.

The trial balances for the two companies on December $31,20$X$5,$ appear below.

Additional Information

$1.$ On the date of combination $($five years ago$),$ the fair value of Steak's depreciable assets was $\backslash (\backslash$$ $50,000\backslash )$ more than the book value. Accumulated depreciation at that date was $\backslash (\backslash$$ $10,000\backslash ).$ The differential assigned to depreciable assets should be written off over the following $10-$year period.

$2.$ There were $\backslash (\backslash$$ $10,000\backslash )$ of intercorporate receivables and payables at the end of $20$X$5.$

Required

a$.$ Give all journal entries that Prime recorded during $20$X$5$ related to its investment in Steak.

b$.$ Give all consolidation entries needed to prepare consolidated statements for $20$X$5.$

c$.$ Prepare a three$-$part worksheet as of December $31,20$X$5.$