On January 1 2013 Piper Company acquired an 80 interest

#6347
On January 1, 2013, Piper Company acquired an 80% interest in Sand Company for
$2,276,000. At that time the capital stock and retained earnings of Sand Company were
$1,800,000 and $700,000, respectively. Differences between the fair value and the book value
of the identifiable assets of Sand Company were as follows:Fair Value in Excess of Book
ValueInventory.....................................$45,000Equipment (net)...............................50,000The
book values of all other assets and liabilities of Sand Company were equal to their fair values on
January 1, 2013. The equipment had a remaining useful life of eight years. Inventory is
accounted for on a FIFO basis. Sand Company's reported net income and declared dividends
for 2013 through 2015 are shown here:Required:Prepare the eliminating/adjusting entries
needed on the consolidated worksheet for the years ended 2013, 2014, and 2015. (It is not
necessary to prepare the worksheet.)1. Assume the use of the cost method.2. Assume the use
of the partial equity method.3. Assume the use of the complete equity method.View Solution:
On January 1 2013 Piper Company acquired an 80 interest

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