Problem
1. Identify the Components that used in determining goodwill:
2. Merando Company acquires 30 percent of Pau Company's common stock for $200,000 at the beginning of the year but does not gain significant influence over Pau. During the year, Pau has net income of $40,000 and pays dividends of $30,000. prepare the journal entries:
3. Beta Corporation acquired 100 percent of the voting shares of Yang Inc. by issuing 10,000 new shares of $10 par value common stock with a $40 market value.
Required:
1) Which company is the parent and which is the subsidiary?
2) Define a subsidiary corporation.
3) Define a parent corporation.
4) Which entity prepares consolidated worksheet?
5) Why are elimination entries used?