Preparation of a consolidated statements

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Reference no: EM13147114

On January 1, 2008, Patel Company acquired 90% of the common stock of Seng Company for $650,000. At that time, Seng had common stock ($5 par) of $500,000 and retained earnings of $200,000.

On January 1, 2010, Seng issued 20,000 shares of its unissued common stock, with a market value of $7 per share, to noncontrolling stockholders. Seng's retained earnings balance on this date was $300,000. Any difference between cost and book value relates to Seng's land. No dividends were declared in 2010.

Required:

A. Prepare the entry on Patel's books to record the effect of the issuance assuming the cost method.

B. Prepare the elimination entries for the preparation of a consolidated statements workpaper on December 31, 2010 assuming the cost method.

Reference no: EM13147114

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