Reference no: EM132585083

On January 1, 2018, Pal Corporation acquired 80% of the voting stock of Secam Corporation for $24,000 when Secam had Capital Stock of $10,000 and Retained Earnings of $8,000. On this date, the book value of Secam's assets and liabilities was equal to the fair value, except for inventories, , which were understated on the books by $1,000 and were sold in 2018, land which was undervalued by $2,000, and equipment with a remaining useful life of 5 years under the straight- line method which was undervalued by $3,000. Any remainder was assigned to goodwill. Financial statements for the two corporations at the end of the ?scal year ended December 31, 2019 appear in the ?rst two colurrms of the partially completed consolidation working papers.

Pal has accounted for its investment in Secam using the equity method of accounting. Pal Corporation owed Secam Corporation $200 on open account at the end of the year. Dividends receivable in the amount of $900 payable from Secam to Pal is included in Pal‘s net receivables.

Required:

Question 1) Prepare the elimination entries required for consolidation on December 31, 2019. Show all your calculations.

Question 2) Complete the consolidation working papers for Pal Corporation and Subsidiary for the year ended December 31, 2019.