Pullman Corporation Acquired a 90% Interest in Sleeter Company for $6,500,000

question 4

Essay

Pullman Corporation acquired a 90% interest in Sleeter Company for $6,500,000 on January 1 2013.At that time Sleeter Company had common stock of $4,500,000 and retained earnings of $1,800,000.The balance sheet information available for Sleeter Company on January 1, 2013, showed the following:
The equipment had a remaining useful life of ten years.Sleeter Company reported $240,000 of net income in 2013 and declared $60,000 of dividends during the year.
Required:
Prepare the workpaper entries assuming the cost method is used, to eliminate dividends, eliminate the investment account, and to allocate and depreciate the difference between implied and book value for 2013.

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Definitions:

Preventive Maintenance

Maintenance activities performed regularly on equipment before faults occur, aimed at reducing the risk of unexpected breakdowns and downtime.

Breakdown Maintenance

The practice of repairing or fixing equipment and machinery only after it has failed or broken down, as opposed to performing regular preventative maintenance.

MTBF Distribution

MTBF (Mean Time Between Failures) Distribution is a statistical representation of the expected performance or reliability of a system, indicating the average time between failures.

Standard Deviation

A measure of the dispersion or variation in a set of values, indicating how spread out the values are from the mean.