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On June 10, 20X8, Game Corporation acquired 60 percent of Amber Companys common stock. The...

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Accounting

On June 10, 20X8, Game Corporation acquired 60 percent of Amber Companys common stock. The fair value of the noncontrolling interest was $30,400 on that date. Summarized balance sheet data for the two companies immediately after the stock purchase are as follows:

On June 10, 20X8, Game Corporation acquired 60 percent of

Item private corp secret company

book value book value fair value

Cash 26800 7000 7000

Account receivable 37000 12000 12000

Inventory 85000 22000 27000

Building and equipment 121000 54000 74000

Investment in secret company45600

Total 315400 95000 120000

Account payable 21000 3000 3000

Bonds payable 166400 41000 41000

common stock 54000 17000

retained earnings 74000 34000

total 315400 95000 44000

Required

a. Give the elimination entries required to prepare a consolidated balance sheet immediately after the purchase of Amber Company shares.

b. Explain how elimination entries differ from other types of journal entries recorded in the normal course of business.

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