Reference no: EM132593529

Question - Pen company Acquired 100% of Star company on January 1 st 2020 for $600,000. At that date, the book value and fair value of assets and liabilities were equal. The following summarize the balance sheet for Star company at the date of acquisition. Assets 750000 Liabilities 150000 Equity Common Stock 300000 Retained Earnings 300000 Star reported a net income at the end of year one equals to $15000 and declared and paid $5000 dividends.

Required:

1- Prepare the journal entry at the acquisition date.

2- Prepare the consolidation entry at the acquisition date.

3- Prepare the journal entries to record the income and dividends declared by Star.

4- Prepare the consolidation entry at the end of year one.