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On January 1, 2011, Parent Company Purchased 80% of the common stock of Subsidiary Company...

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Accounting

On January 1, 2011, Parent Company Purchased 80% of the common stock of Subsidiary Company for $402,000. On this date, Subsidiary had total owners' equity of $440,000. Land was undervalued by $20,000, Equipment with a 5-year remaining life was undervalued by $15,000 and inventory was undervalued by $10,000. Any other excess of cost over book value is due to goodwill. Parent accounts for its investment in Subsidiary using the simple equity method.

1) Prepare the Determination and Distribution of Excess Schedule

2) Make all of the entries pertaining to eliminating the investment in Sub's Common Stock

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