Paco Company Acquired 100 Percent of the Stock of Garland

question 33

Essay

Paco Company acquired 100 percent of the stock of Garland Corp.on December 31,20X8.The stockholder's equity section of Garland's balance sheet at that date is as follows:
Paco financed the acquisition by using $880,000 cash and giving a note payable for $400,000.Book value approximated fair value for all of Garland's assets and liabilities except for buildings which had a fair value $60,000 more than its book value and a remaining useful life of 10 years.Any remaining differential was related to goodwill.Paco has an account payable to Garland in the amount of $30,000.
Required:
1)Present all eliminating entries needed to prepare a consolidated balance sheet immediately following the acquisition.
2)What additional eliminating entry must be prepared at December 31,20X9?

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Definitions:

Identification

The process of establishing or describing the identity of something or someone.

Sublimation

A psychological mechanism by which impulses or fantasies that society deems unacceptable are converted into actions or behaviors that are considered acceptable.

Reaction Formation

A psychological defense mechanism in which an individual unconsciously replaces their true feelings perceived as unacceptable with their opposite.

Projection

A psychological defense mechanism where individuals attribute their own unacceptable thoughts, feelings, or motives to someone else.