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:

Machine Setups

The preparations and adjustments made to machines before starting a production run, potentially including configuration for different products.

Activity-Based Costing

A costing methodology that assigns expenses to products and services based on the activities that go into producing them.

Manufacturing Overhead

All manufacturing costs that are not direct materials or direct labor, including costs associated with running the factory such as utilities and maintenance.

Overhead Cost

Expenses related to the operation of a business that are not directly tied to a specific product or service, such as utilities and rent.