On January 1, 2016, Pilsner Company Acquired an 80% Interest

question 28

Essay

On January 1, 2016, Pilsner Company acquired an 80% interest in Smalley Company for $3,600,000. On that date, Smalley Company had retained earnings of $800,000 and common stock of $2,800,000. The book values of assets and liabilities were equal to fair values except for the following: The equipment had an estimated remaining useful life of 8 years. One-half of the inventory was sold in 2016 and the remaining half was sold in 2017. Smalley Company reported net income of $240,000 in 2016 and $300,000 in 2017. No dividends were declared or paid in either year. Pilsner Company uses the cost method to record its investment in Smalley Company.
Required:
Prepare, in general journal form, the workpaper eliminating entries necessary in the consolidated statements workpaper for the year ending December 31, 2017.

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Definitions:

Biopsychosocial Approach

A holistic perspective on health and illness that integrates biological, psychological, and social factors.

Genetic Predispositions

The genetic characteristics inherited from parents that may influence an individual's likelihood of developing certain conditions or traits.

Learned Behaviors

are actions or reactions developed through experience or conditioning, contrasting with behaviors that are instinctual or innate.

Classical Conditioning

A learning strategy that consists of continuously pairing two stimuli; the reaction that is at the beginning evoked by the second stimulus, is eventually evoked by the first stimulus singularly.