4. On January 1, 2014, Pirate Company acquired an 80% interest in ...

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4. On January 1, 2014, Pirate Company acquired an 80% interest in Sun Company for $425,000. On that date, Sun reported stockholder's equity of $400,000: $100,000 in common stock and $300,000 in retained earnings. In setting the acquisition price, Pirate appraised three accounts at values different from the balances reported within Sun's financial records: Buildings (8-year remaining life): Undervalued by $32,500 Land: Undervalued by $50,000 Royalty agreement (20-year remaining life): Not previously recorded; Valued at $30,000 At December 31, 2018, the trial balances of these two companies are as follows in DEBIT / (CREDIT) format: Pirate Company Sun Company Current Assets 605,000 280,000 Investment in Sun Company 425,000 - Land 200,000 300,000 Buildings (net) 640,000 290,000 Equipment (net) 380,000 160,000 Royalty Agreement - - Goodwill - - Current Liabilities (910,000) (300,000) Common Stock (480,000) (100,000) Retained Earnings, 1/1/18 (704,000) (480,000) Dividends Declared 90,000 20,000 Noncontrolling Interest - - Revenues (780,000) (360,000) Dividend Income (16,000) - Expenses 550,000 190,000 - - Included in these figures is a $20,000 payable that Sun owes to the parent company. No goodwill impairments have occurred since the acquisition date. REQUIRED: a. Prepare the elimination entries that would be required for consolidation for 2018. b. Determine the consolidated totals of each item above for 2018.

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