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Masterson Company acquires a 80% interest in its subsidiary for a purchase price of $620,800. The excess of the purchase price over the book value of the subsidiary's Stockholders' Equity is allocated to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an unrecorded Patent that the parent valued at $100,000, and Goodwill of $150,000, 80% of which is allocated to the parent.
The parent and the subsidiary report the following balance sheets on the acquisition date:
Masterson
Subsidiary
Cash
mce_markernbsp; 920,753
$107,576
Current Liabilities
mce_markernbsp; 814,779
$165,648
Accounts receivable
725,760
165,648
Long-term Liabilities
3,379,200
238,000
Inventory
1,099,980
212,772
Common Stock
927,045
47,600
Equity Investment
620,800
APIC
688,905
59,500
PPE, net
5,291,244
393,652
Retained Earnings
2,848,608
368,900
$8,658,537
$879,648
Prepare the consolidation journal entries on the acquisition date.
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