a.
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Eliminating entries,
December 31, 20X8:
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E(1)
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Income from
Subsidiary
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21,000
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Dividends Declared
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8,000
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Investment in Skate Company Stock
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13,000
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Eliminate income from subsidiary.
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E(2)
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Income to
Noncontrolling Interest
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5,250
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Dividends Declared
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2,000
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Noncontrolling Interest
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3,250
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Assign income to noncontrolling interest:
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$5,250 = ($30,000 - $2,500 - $1,250) x .20
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E(3)
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Common Stock — Skate
Company
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30,000
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Additional Paid-In
Capital — Skate Company
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20,000
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Retained Earnings,
January 1
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150,000
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Differential
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63,750
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Investment in Skate Company Stock
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211,000
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Noncontrolling Interest
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52,750
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Eliminate beginning investment balance:
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$63,750 = $75,000 – [($50,000 / 20 years)
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+ ($25,000 / 20 years)] x
3 years
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E(4)
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Patents
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42,500
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Buildings and
Equipment
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25,000
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Accumulated Depreciation
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3,750
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Differential
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63,750
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Assign differential:
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$42,500 = $50,000 - [($50,000 / 20 years)
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x 3 years]
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$3,750 = ($25,000 / 20 years) x 3 years
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E(5)
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Amortization Expense
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2,500
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Depreciation Expense
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1,250
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Patents
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2,500
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Accumulated Depreciation
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1,250
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Amortize differential.
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E(6)
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Buildings and
Equipment
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60,000
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Retained Earnings,
January 1
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15,000
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Depreciation Expense
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1,500
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Accumulated Depreciation
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73,500
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Eliminate unrealized profit on buildings:
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$60,000 = $125,000 - $65,000
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$15,000 = $65,000 - ($125,000 - $75,000)
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$ 1,500
= ($65,000 / 10 years) -
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($125,000 / 25 years)
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$73,500 = ($5,000 x 16 years) - ($6,500
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x
1 year)
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P6-35 (continued)
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E(7)
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Retained Earnings,
January 1
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10,400
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Noncontrolling
Interest
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2,600
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Land
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13,000
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Eliminate unrealized profit on land.
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P6-35 (continued)
b.
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Pond Corporation and
Skate Company
Consolidation
Workpaper
December 31, 20X8
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Pond
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Skate
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Eliminations
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Consol-
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Item
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Corp.
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Co.
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Debit
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Credit
|
idated
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Sales
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450,000
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250,000
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700,000
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Income from
Subsidiary
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21,000
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(1) 21,000
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Interest Income
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14,900
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14,900
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Credits
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485,900
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250,000
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714,900
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Cost of Goods Sold
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285,000
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136,000
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421,000
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Other Operating
Expenses
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50,000
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40,000
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90,000
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Depreciation Expense
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35,000
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24,000
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(5) 1,250
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(6) 1,500
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58,750
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Interest Expense
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24,000
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10,500
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34,500
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Miscellaneous
Expenses
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11,900
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9,500
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21,400
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Amortization Expense
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(5) 2,500
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2,500
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Debits
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(405,900)
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(220,000)
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(628,150)
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Consolidated Net
Income
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86,750
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Income to Noncon-
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trolling Interest
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(2) 5,250
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(5,250)
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Income, carry
forward
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80,000
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30,000
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30,000
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1,500
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81,500
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Ret. Earnings, Jan.
1
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241,400
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150,000
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(3)150,000
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(6) 15,000
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(7) 10,400
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216,000
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Net Income, from
above
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80,000
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30,000
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30,000
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1,500
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81,500
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321,400
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180,000
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297,500
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Dividends Declared
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(30,000)
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(10,000)
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(1) 8,000
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(2) 2,000
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(30,000)
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Ret. Earnings, Dec.
31,
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carry forward
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291,400
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170,000
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205,400
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11,500
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267,500
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Cash
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68,400
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47,000
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115,400
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Accounts Receivable
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130,000
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65,000
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195,000
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Interest and
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Other Receivables
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45,000
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10,000
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55,000
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Inventory
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140,000
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50,000
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190,000
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Land
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50,000
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22,000
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(7) 13,000
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59,000
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Buildings and
Equipment
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400,000
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240,000
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(4) 25,000
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(6) 60,000
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725,000
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Investment in Skate
|
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Company Stock
|
224,000
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(1) 13,000
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(3)211,000
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Investment in Tin
Co.
|
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Bonds
|
134,000
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134,000
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Bond Discount
|
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3,000
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3,000
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Differential
|
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(3) 63,750
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(4) 63,750
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Patents
|
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(4) 42,500
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(5) 2,500
|
40,000
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Debits
|
1,191,400
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437,000
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1,516,400
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