On January 1, 20X7, Jones Company Acquired 90 Percent of the Outstanding

question 47

Essay

On January 1, 20X7, Jones Company acquired 90 percent of the outstanding common stock of Smith Corporation for $1,242,000. On that date, the fair value of noncontrolling interest was equal to $138,000. The entire differential was related to land held by Smith. At the date of acquisition, Smith had common stock outstanding of $520,000, additional paid-in capital of $200,000, and retained earnings of $540,000. During 20X7, Smith sold inventory to Jones for $440,000. The inventory originally cost Smith $360,000. By year-end, 30 percent was still in Jones' ending inventory. During 20X8, the remaining inventory was resold to an unrelated customer. Both Jones and Smith use perpetual inventory systems.
Income and dividend information for both Jones and Smith for 20X7 and 20X8 are as follows: Assume Jones uses the cost method to account for its investment in Smith.
Required:
a. Present the worksheet elimination entries necessary to prepare consolidated financial statements for 20X7.
b. Present the worksheet elimination entries necessary to prepare consolidated financial statements for 20X8.

Understand the concept of average total cost.

Identify how different costs behave as production levels change in the short run.

Apply basic mathematical operations to solve for costs in short-run production scenarios.

Interpret graphical or tabulated data related to production costs.

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Definitions:

Drug Overdoses

The ingestion or application of a drug in quantities greater than recommended or typically practiced, leading to serious health risks or death.

Metabolic Rate

The rate at which the body consumes energy, including during resting and active states, crucial for processes such as maintaining body temperature and cellular function.

Caloric Needs

The amount of energy, measured in calories, that a person requires to maintain bodily functions and support daily activities.

Overeating

Consumption of more food than the body needs for energy, often leading to weight gain and potentially obesity.