Question

Blake Corporation acquired 100 percent of Shaw Corporation's voting shares on January 1, 20X3, at underlying book value. At that date, the book values and fair values of Shaw's assets and liabilities were equal. Blake uses the equity method in accounting for its investment in Shaw. Adjusted trial balances for Blake and Shaw on December 31, 20X3, are as follows:

	Blake Corporation				Shaw Corporation
Item		Debit		Credit		Debit		Credit
Current Assets	$	156,000			$	125,000
Depreciable Assets (net)		336,000				237,000
Investment in Shaw Corporation Stock		130,000
Depreciation Expense		21,000				11,000
Other Expenses		98,000				71,000
Dividends Declared		40,000				35,000
Current Liabilities			$	48,000			$	38,000
Long-Term Debt				47,000				194,000
Common Stock				192,000				80,000
Retained Earnings				222,000				30,000
Sales				217,000				137,000
Income from Subsidiary				55,000
	$	781,000	$	781,000	$	479,000	$	479,000

Record the basic consolidation entry.

Answer 1