Pass journal entries to record the amortized excess value

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Question - On December 31, 2020, Parent company (A) acquired 80% of Subsidiary (B) outstanding common stocks for SR 368,000, Subsidiary's fair value of net assets was SR 460,000. During 2021, subsidiary net income and dividends declared were 100,000 and 50,000 respectively. The begging balance for   Accumulated depreciation of the subsidiary's equipment amounted to SR 50,000. The parent uses the non-pushdown accounting and equity method. Subsidiary's fair value of net assets was as follows:

Book Value Element

Amount in SR



Common Stock

150,000



Retained  Earning

120,000



Total


270,000


Under -Or Over Valuation




Inventory

(10,000)


2 Months

Land

50,000


No Useful Life

Equipment

100,000


4 Years

Total Under -Or Over Valuation


140,000


Good Will


50,000

No Useful Life

Total Under -Or Over Valuation


490,000


Required - Pass journal entries to record the amortized excess value reclassification entry?

Reference no: EM133130570

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