Reference no: EM133005912

Snow Corporation acquired all of the outstanding $10 par voting common stock of Lannister, Inc., on January 1, Year 2, in exchange for 50,000 shares of its $10 par voting common stock. On December 31, Year 1, Snow's common stock had a closing market price of $15 per share on a national stock exchange. Both companies continued to operate as separate business entities maintaining separate accounting records with years ending December 31.

• At the acquisition date, the fair value of Lannister's machinery exceeded its carrying amount by $54,000. The excess will be amortized over the estimated average remaining life of 6 years. The fair values of all of Lannister's other assets and liabilities were equal to their carrying amounts.
• On July 1, Year 2, Snow sold a warehouse facility to Lannister for $129,000 cash. At the date of sale, Snow's carrying amounts were $33,000 for the land and $66,000 for the undepreciated cost of the building. Lannister allocated the $129,000 purchase price to the land for $43,000 and to the building for $86,000. Lannister is depreciating the building over its estimated 5-year remaining useful life by the straight-line method with no salvage value.
• During Year 2, Snow purchased merchandise from Lannister at an aggregate invoice price of $180,000, which included a 100% markup on Lannister's cost. At December 31, Year 2, Snow owed Lannister $75,000 on these purchases, and $36,000 of the merchandise purchased remained in Snow's inventory.
• At December 31, Year 2, Lannister paid $40,000 in dividends on its common stock.

Problem 1: Calculate Snow's eliminations for consolidation