Eliminating Entries for Subsidiary with Other Comprehensive Income
Palmer Corporation acquired 70 percent of Krown Corporation’s ownership on January 1, 20X8, for $140,000. At that date, Krown reported capital stock outstanding of $120,000 and retained earnings of $80,000, and the fair value of the noncontrolling interest was equal to 30 percent of the book value of Krown. During 20X8, Krown reported net income of $30,000 and comprehensive income of $36,000 and paid dividends of $25,000.
Required
a. Present all equity-method entries that Palmer would have recorded in accounting for its investment in Krown during 20X8.
b. Present all eliminating entries needed at December 31, 20X8, to prepare a complete set of consolidated financial statements for Palmer Corporation and its subsidiary.
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