Plain Corporation Acquired a 75% Interest in Swampy Company on January

Essay

Plain Corporation acquired a 75% interest in Swampy Company on January 1, 2013, for $2,000,000.The book value and fair value of the assets and liabilities of Swampy Company on that date were as follows:
The property and equipment had a remaining life of 6 years on January 1, 2013, and the deferred charge was being amortized over a period of 5 years from that date.Common stock was $1,500,000 and retained earnings was $900,000 on January 1, 2013.Plain Company records its investment in Swampy Company using the cost method.
Required:
Prepare, in general journal form, the December 31, 2013, workpaper entries necessary to:
A.Eliminate the investment account.
B.Allocate and amortize the difference between implied and book value.