Para Company

On October 1, 2010, Para Co. purchased 90% of the outstanding common stock of Star Co. for $210,000. Additional data concerningStar Co. for 2010 follows: Common stock………………………….$70,000 Other contributed capital……………..30,000 Retained earnng, 1/1…………………..70,000 Net income………………………………60,000 Dividends declared and paid(12/15)….10,000 Prepare workpaper eliminating entries for a workpaper on Dec. 31, 2010. Star Co.’s net income is earned evenly throughout the year. (Use alternative two-tye partial year reporting alternative.)

Any difference between book value and the value implied by the purchase price relates to goodwill. Para company uses the partial equity method to record its investment in Star company.

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Level/Year: 2nd
Subject: advanced accountingis