Boxwell Corporation purchased 60 percent of Conway Company on January 1, 20X7, for a total of $277,500. Conway reported the following operating results for the next three years:
| Year | Net Income | Dividends Paid |
| 20X7 |
$45,000 |
$25,000 |
| 20X8 |
$55,000 |
$35,000 |
| 20X9 |
$30,000 |
$10,000 |
On January 1, 20X7, Conway has $250,000 of $5 par common stock outstanding and retained earnings of $150,000. At that date, Conway held land with a book value of $22,500 and a market value of $30,000 and equipment with a book value of $320,000 and a market value of $360,000. The remainder of the purchase price was attributable to patents, which had a remaining economic life of 10 years. All depreciable assets held by Conway on the date of acquisition had a remaining economic life of six years.
Analyze the data given and answer the following questions independently in a
four- to five-page Microsoft Word document.
- Prepare the eliminating entries needed at January 1, 20X7, to prepare a consolidated balance sheet.
- Compute the balance of the Boxwell's investment in Conway at January 1, 20X9, assuming the equity method is used.
- Prepare the journal entries recorded by Boxwell with regard to its investment in Conway during 20X9.
- Prepare the eliminating entries needed at December 31, 20X9, to prepare the consolidated income statement, retained earnings statement, and balance sheet.