Plain Corporation Acquired a 75% Interest in Swampy Company on January

question 19

Essay

Plain Corporation acquired a 75% interest in Swampy Company on January 1, 2013, for $2,000,000.The book value and fair value of the assets and liabilities of Swampy Company on that date were as follows:
The property and equipment had a remaining life of 6 years on January 1, 2013, and the deferred charge was being amortized over a period of 5 years from that date.Common stock was $1,500,000 and retained earnings was $900,000 on January 1, 2013.Plain Company records its investment in Swampy Company using the cost method.
Required:
Prepare, in general journal form, the December 31, 2013, workpaper entries necessary to:
A.Eliminate the investment account.
B.Allocate and amortize the difference between implied and book value.

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Definitions:

Hypothalamus

A small region of the brain located below the thalamus, responsible for regulating many bodily functions, including hunger, thirst, sleep, and emotional activity.

Thalamus

A structure in the brain located above the brainstem, that serves as a relay station for transmitting sensory information to the cerebral cortex.

Hormone

Chemical messengers produced by the endocrine glands that regulate various body functions and processes.

Gland

An organ in the body that secretes particular chemical substances for use in the body or for discharge into the surroundings.