Mortar Corporation acquired 80 percent ownership of Granite Company on January 1, 20X7, for…
Mortar Corporation acquired 80 percent ownership of Granite Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for the two companies on December 31, 20X7, included the following amounts:
Additional Information 1. On January 1, 20X7, Granite reported net assets with a book value of $150,000 and a fair value of $191,250. 2. Granite’s depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of Granite’s net assets is related entirely to buildings and equipment. 3. Mortar used the equity method in accounting for its investment in Granite. 4. Detailed analysis of receivables and payables showed that Granite owed Mortar $16,000 on December 31, 20X7.
Required a. Give all journal entries recorded by Mortar with regard to its investment in Granite during 20X7. b. Give all elimination entries needed to prepare a full set of consolidated financial statements for 20X7. c. Prepare a three-part consolidation worksheet as of December 31, 20X7.