On January 1, 20X7, Gild Company acquired 60 percent of the outstanding common stock of Leeds Company at the book value of the shares acquired. On that date, the fair value of noncontrolling interest was equal to 40 percent of book value of Leeds. At the time of purchase, Leeds had common stock of $1,000,000 outstanding and retained earnings of $800,000.
On December 31, 20X7, Gild purchased 50 percent of Leeds' bonds outstanding which were originally issued on January 1, 20X4, at 99. The total bond issue has a face value of $600,000,pays 10 percent interest annually, and has a 10-year maturity. Any premium or discount is amortized using the effective interest method. Gild paid $306,000 for its investment in Leeds' bonds and intends to hold the bonds until maturity.
A) Present the worksheet elimination entries necessary to prepare consolidated financial statements for 20X7.
B) Present the worksheet elimination entries necessary to prepare consolidated financial statements for 20X8.