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

question 32

Essay

Pullman Corporation acquired a 90% interest in Sleeter Company for $6,500,000 on January 1 2016. 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, 2016, showed the following: The equipment had a remaining useful life of ten years. Sleeter Company reported $240,000 of net income in 2016 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 2016.

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Definitions:

Utility Computing

A technology whereby a service provider makes computing resources and infrastructure management available to a customer as needed.

Virtualization

The process of creating a virtual version of something, including virtual computer hardware platforms, storage devices, and computer network resources.

IT Departments

Units within organizations responsible for overseeing and managing information technology and systems.

Stand-alone Mainframes

Powerful, single computers primarily used by large organizations for bulk data processing, such as census, industry and consumer statistics, and financial transaction processing.