Practice
Check your answer
Write your response and explain your reasoning.
Prepare the Cedar Trail consolidation worksheet with visible debit and credit elimination columns. Prove consolidated assets and liabilities and explain why the entries do not belong in either legal entity's ledger.
Compare your reasoning with the worked answer
Consolidated assets are $4,000,000 plus $1,200,000 less the $800,000 investment and $60,000 receivable plus the $100,000 basis adjustment, or $4,440,000. Liabilities are $1,500,000 plus $350,000 less the $60,000 payable, or $1,790,000.