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Prepare consolidation journal entries for the given dates

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Question

Proprio Company acquires 100% of Ception Company for $600,000 on January 1, 2016. Ception reported common stock of $300,000, no additional paid-in capital, and retained earnings of $210,000 on that date.

Equipment was undervalued by $33,000 and it had a 2-year remaining life, while its only building was undervalued by $44,000 and it had a 8-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on annual reviews, goodwill has not been impaired. Ception earns income and pays dividends as follows:

2016 2017 2018

Net income $100,000 $140,000 $120,000

Dividends 60,000 80,000 70,000

Proprio is using equity method for its investment in Ception. Prepare consolidation journal entries for the following dates:

1. 12.31.2016

2. 12.31.2017

3. 12.31.2018

Reference no: EM132379878

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