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34.     For the fiscal year ended March 31, 2006, Sable Company, the 80%-owned subsidiary of Pastel Corporation, had a net income of $600,000 and declared and paid dividends of $200,000. Fiscal Year 2006 depreciation and amortization of differences between current fair values and carrying amounts of Sable's identifiable net assets was $30,000; and Fiscal Year 2006 impairment of goodwill recognized in the business combination was $1,000.
          Prepare journal entries for Pastel Corporation to record the Fiscal Year 2006 operating results of Sable Company under the:
          a. Equity method of accounting
          b. Cost method of accounting
          Omit explanations for the journal entries and disregard income taxes.

35.     Refer to the above facts. Assume that, in addition to the revenue and expenses it recognized for Sable Company's operations, Pastel Corporation had net sales of $4,800,000 and total costs and expenses of $3,300,000, but declared no dividends.

          Prepare closing entries (omit explanations) on March 31, 2006, for Pastel Corporation under the:
          a. Equity method of accounting
          b. Cost method of accounting

36.     On the date of the business combination of Passman Corporation and Slago Company, the following working paper elimination was prepared (in journal entry format):




Working Paper Elimination



January 31, 2005




Common Stock?Slago





Additional Paid-in Capital?Slago





Retained Earnings?Slago





Inventories?Slago (first-in, first-out cost)





Plant Assets (net)?Slago










Investment in Slago Company




Common Stock?Passman


To eliminate intercompany investment and equity
          accounts of subsidiary on date of business combination;
          and to allocate excess of cost over carrying amount
          of identifiable assets acquired, with remainder to
          goodwill. (Income tax effects are disregarded.)

          Additional Information
          1.      On January 31, 2005, the remaining economic life of Slago's plant assets was 10 years, and Slago includes straight-line depreciation in operating expenses.
          2. Goodwill was unimpaired on January 31, 2006.
          3.      Slago declared a dividend of $20,000 to Passman on December 27, 2005, and paid the dividend on January 17, 2006. Slago had a net income of $90,000 for the fiscal year ended January 31, 2006.
          a. Prepare journal entries for Passman Corporation to record the operating results of Slago Company for the year ended January 31, 2006, under the equity method of accounting. Omit explanations and disregard income taxes.
          b. Prepare a working paper elimination (in journal entry format) for Passman Corporation and subsidiary on January 31, 2006. Omit explanation and disregard income taxes.

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