(answered) On January 1 2014 Palmer Company acquired a

90 interest
On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost
of $1,000,000. At the purchase date, Stevens Company's stockholders' equity consisted of the
following:Common stock..............................$500,000Retained earnings............................190,
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acquired-a-90-interest
On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost
of $1,000,000. At the purchase date, Stevens Company's stockholders' equity consisted of the
following:Common stock..............................$500,000Retained
earnings............................190,000An examination of Stevens Company's assets and liabilities
revealed the following at the date of acquisition:Additional Information-Date of
AcquisitionStevens Company's equipment had an original life of 15 years and a remaining
useful life of 10 years. All the inventory was sold in 2014. Stevens Company purchased its
bonds payable on the open market on January 10, 2014, for $150,000 and recognized a gain of
$55,556.Financial statement data for 2016 are presented here:Required:A. What method is
Palmer using to account for its investment in Stevens? How can you tell?B. Prepare in general
journal form the workpaper entry to allocate and depreciate the difference between book value
and the value implied by the purchase price in the December 31, 2014, consolidated statements
workpaper.C. Prepare a consolidated financial statements workpaper for the year ended
December 31, 2016.D. Prepare in good form a schedule or t-account showing the calculation of
the controlling and noncontrolling interest in consolidated net income for the year ended
December 31, 2016.View Solution:
On January 1 2014 Palmer Company acquired a 90 interest
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