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1 October, 17:14

Jordan, Inc., holds 75 percent of the outstanding stock of Paxson Corporation. Paxson currently owes Jordan $470,000 for inventory acquired over the past few months. In preparing consolidated financial statements, what amount of this debt should be eliminated?

a. - 0-. b. $100,000. c. $300,000. d. $400,000.

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  1. 1 October, 20:17
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    the complete amount of the debt: 470,000

    Explanation:

    Jordan owns 75% of Paxson

    Paxson owes 470,000 to parent company from inventory purchases.

    As this debt is from intra-entity transaccions.

    This amount balance-off as are debt to the subsidiary and recevable for the parent. It will be competely eliminated in the consolidated financial statement.
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