On January 1,2016,Pilsner Company Acquired an 80% Interest in Smalley

Essay

On January 1,2016,Pilsner Company acquired an 80% interest in Smalley Company for $3,600,000.On that date,Smalley Company had retained earnings of $800,000 and common stock of $2,800,000.The book values of assets and liabilities were equal to fair values except for the following:
The equipment had an estimated remaining useful life of 8 years.One-half of the inventory was sold in 2016 and the remaining half was sold in 2017.Smalley Company reported net income of $240,000 in 2016 and $300,000 in 2017.No dividends were declared or paid in either year.Pilsner Company uses the cost method to record its investment in Smalley Company.
Required:
Prepare,in general journal form,the workpaper eliminating entries necessary in the consolidated statements workpaper for the year ending December 31,2017.