Canton Corporation is a majority-owned subsidiary of West Corporation

Accounting Mar 06, 2021

Canton Corporation is a majority-owned subsidiary of West Corporation. West acquired 75 percent ownership on January 1, 2013, for $133,500. At that date, Canton reported common stock outstanding of $60,000 and retained earnings of $90,000, and the fair value of the noncontrolling interest was $44,500. The differential is assigned to equipment, which had a fair value $28,000 more than book value and a remaining economic life of seven years at the date of the business combination. Canton reported net income of $30,000 and paid dividends of $12,000 in 2013.

a.	Prepare the journal entries recorded by West during 2013 on its books if it accounts for its investment in Canton using the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b.	Prepare the consolidation entries needed at December 31, 2013, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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