pool company purchased 90 of the outstanding common stock of spruce company on decem 4372852

Pool Company purchased 90% of the outstanding common stock of Spruce Company on December 31, 2011, for cash. At that time the balance sheet of Spruce Company was as follows:Current assets…………. $1,050,000Plant and equipment……….. 990,000Land…………. 170,000Total assets…………. $2,210,000Liabilities…………. $ 820,000Common stock, $20 par value…….. 900,000Other contributed capital………. 440,000Retained earnings…………. 150,000Total …………….. 2,310,000Less treasury stock at cost, 5,000 shares… 100,000Total equities………… $2,210,000Required:Prepare the elimination entry required for the preparation of a consolidated balance sheet workpaper on December 31, 2011, assuming:(1) The purchase price of the stock was $1,400,000. Assume that any difference between the book value of net assets and the value implied by the purchase price relates to subsidiary land.(2) The purchase price of the stock was $1,160,000. Assume that the subsidiary land has a fair value of $180,000, and the other assets and liabilities are fairly valued.View Solution:
Pool Company purchased 90 of the outstanding common stock of

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