Question

Consolidation Eliminating Entries, Date of Acquisition and Two Years Later Plaza Hotels acquired a 90 percent interest in Stardust of the 10 percent noncontroi acquisition reported net assets were carried at amounts approximating fair value, except fo LO 1, 2 Casinos on January 1, 2020 for S51,100,000. The fair value ing interest at the date of acquisition was $2,900.000. Stardust's date-of r these items: Plant and equipment, 10-year life, straight-line, is overvalued by S6,000,000 Previously unrecorded limited-life identifiable intangibles, 4-year life, straight-line, were val $8,000,000 Stardust's equity accounts at the date of acquisition were as follows: Capital stock Retained earnings Accumulatedotheeensive income. Total. . 300,000 1,650,000 50.000 . $2,000,000 Stardust reports net income of $4,000,000 and other comprchensive loss of $10,000 for 2021. Stardusı reported net income of S2,800,000 and other comprehensive income of $25,000 in 2020. Stardust did not declarc any dividends in either ycar. Goodwill from this acquisition is impaircd by $200,000 during 2021 but was not impaired in 2020 Prepare the consolidation climinating entrics (E) and (R) at the date of acquisition.

Answer 1

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A. Goodwill Working:
Acquisition Cost		$51,100,000
Fair Value of Non Controlling Interest		$ 2,900,000
Total Fair Value		$54,000,000
Less:
Book Value of Stardust	$ 2,000,000
Revaluations of Plant and Equipment	$ -6,000,000
Revaluation of Tangibles	$ 8,000,000	$ 4,000,000
Goodwill		$50,000,000
Plaza's Goodwill		$47,500,000
51100000-(4000000*90%)
Non Controlling Interest		$ 2,500,000
Elimination Entry (E ):
	Debit	Credit
Capital Stock	$     300,000
Retained Earning	$ 1,650,000
Accumulated Other Comprehensive Income	$        50,000
Investment in Stardust 90%		$ 1,800,000
Non Controlling Interest 10%		$     200,000
Elimination Entry (R ):
Identifiable Intangibles	$ 8,000,000
Goodwill	$50,000,000
Plant and Equipment		$ 6,000,000
Investment in Stardust 90%		$49,300,000
Non Controlling Interest 10%		$ 2,700,000
[90*(8000000-6000000)]+47500000
[10*(8000000-6000000)]+2500000