Use the Following Information to Answer the Question(s) Below

question 4

Essay

Use the following information to answer the question(s) below.
On January 1, 2014, Penelope Company acquired a 90% interest in Leah Company for $180,000 cash. On January 1, 2014, Leah Company had the following assets and liabilities:
Push-down accounting is used for the acquisition.
-Partel Corporation purchased 75% of Sandford Corporation on January 1, 2014, for $230,000. Balance sheets for the two companies on this date, prepared just prior to the purchase, are provided below.
Required:
1. Prepare a consolidated balance sheet using the entity theory of consolidation.
2. Prepare a consolidated balance sheet using the parent company theory of consolidation.

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Definitions:

Real Defense

Legitimate legal reasons that can be used to avoid the enforcement of a contract or negate an obligation.

Obligated

Required by a legal or moral duty to do something or responsible for an action.

Overdue

Overdue signifies being past the time or date by which a task, obligation, or payment was due to be completed or made.

Principal

In finance, the original sum of money borrowed or invested, excluding any interest or dividends. In law, the primary party who authorizes another (the agent) to act on their behalf.