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EXERCISE 4 10 Interim Purchase Partial-Year Reporting Alternative Equity MethodOn October 1, 2010, Para Company purchased 90% of the outstanding common stock of Star Company for $210000 Additional

EXERCISE 4-10 Interim Purchase, Partial-Year Reporting Alternative, Equity MethodOn October 1, 2010, Para Company purchased 90% of the outstanding common stock ofStar Company for $210,000. Additional data concerning Star Company for 2010 follows:Common stock $70,000Other contributed capital 30,000Retained earnings, 1/1 70,000Net income 60,000Dividends declared and paid (12/15) 10,000Any difference between book value and the value implied by the purchase price relates togoodwill. Para Company uses the partial equity method to record its investment in Star Company.Required:A. Prepare on Para Company’s books journal entries to record the investment-related activitiesfor 2010.B. Prepare workpaper eliminating entries for a workpaper on December 31, 2010. Star Company’snet income is earned evenly throughout the year. (Use alternative two—the partialyearreporting alternative.)C. Repeat part B, but use the full-year reporting alternative.

 

May 22 2020 View more View Less

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