Reference no: EM132869601

Question - On January 1, 2020, Kettle Co. purchased all of the voting stock of Bland Co. On that date, Bland Co. decided to elect "pushdown accounting." On January 1, 2020, just after the acquisition, the two companies' balance sheets appeared as below (in millions), with relevant fair value information:

Kettle Co. Bland Co.

Book Value Book Value Fair Value

Dr (Cr) Dr (Cr) Dr (Cr)

Current assets $10 $5 $3

Plant and equipment, net 500 120 90

Investment in Bland CO. 50

Liabilities (360) (121) (121)

Capital Stock (80) (5)

Retained earnings (120) 2

Accumulated OCI ---- (1)

Bland Co. has previously unreported identifiable intangible assets with a fair value of $25 million. Both companies operate under U.S. GAAP

Required -

A) Show the journal entry that Bland Co. should make on its books to implement pushdown accounting on January 1, 2020.

B) In journal entry format, following the implementation of pushdown accounting, show the working paper eliminating entry or entries necessary to consolidate the balance sheets of Kettle Co. and Bland Co. on January 1, 2020.