Keep a schedule for comparing the cost of investing

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Problem - Serena Company has 350,000 shares of $9 par value of common stock outstanding at all times and on balance retained earnings as shown here:

 

Retained Earnings

January, 1, 2013

$260,000

January, 1, 2014

540,000

January, 1, 2015

630,000

January, 1, 2016

820,000

Peter Company acquires the shares of Serena Company through an open market purchase as follows:

Date

%Acquired

Shares

Cost

1/1/13

10%

30,000

$365,000

1/1/14

25%

75,000

960,000

1/1/15

45%

135,000

1,890,000

Serena's company declared no dividends during this period. Fair value of Serena's assets and liabilities Companies roughly equal their book value throughout this period (2013 to 2015). Peter Company uses the cost method.

Required -

1. Keep a schedule for comparing the cost of investing to the book value of the equity earned.

2. Keep an elimination journal for the preparation of a consolidated report working paper as of December 31, 2015?

Reference no: EM132851090

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