Exercise problems

4-2

Step 1

Prepare Work paper entries that would be made in the preparation of a consolidated statement statements work paper on December 31, 2013.

Step 2

4-3

Step 1

(A)

Equity method is used by P Company to account for its investment in S Company. The balance is investment account at the beginning of year is 532,000, which is calculated as follows.

Step 2

For this purpose, the partial equity method as well as complete equity method in the same entries because the price paid for S Company is 95% of book value of S Company.

And, no asset adjustments and no excess amortization would be considered. Equity income also under two methods will be same.

PROBLEMS

4-18

Step 1

Consolidated statement of cash flows using the indirect for the year ended December 31,...