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

question 30

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:

Contextual Approach

An analysis or strategy that takes into account the surrounding circumstances, variables, or conditions that influence an event or behavior.

Unethical Behaviour

Actions that violate moral guidelines, principles, or standards within a specific context, such as business or professional practices.

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Individuals or groups responsible for making choices or judgments in organizations or systems.

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