Homework Answers
| 70% | 30% (NCI) | |||
| Common stock | $4,000,000 | $2,800,000 | $1,200,000 | |
| Retained earnings | $5,142,857 | $3,600,000 | $1,542,857 | |
| Total stockholder's equity | $9,142,857 | $6,400,000 | $2,742,857 | |
| Purchase price | $6,400,000 | |||
| Account titles and explanation | Debit | Credit | ||
| A | Investment in subsidiary | $6,400,000 | ||
| Cash | $6,400,000 | |||
| (entry for initial consolidation) | ||||
| Investment in subsidiary | $840,000 | (1200000*0.7) | ||
| Equity Income subsidiary | $840,000 | (1200000*0.7) | ||
| (entry for recording income) | ||||
| Cash A/c | $168,000 | (240000*70%) | ||
| Investment in subsidiary | $168,000 | (240000*70%) | ||
| B | Net Assets | $6,400,000 | ||
| Investment in subsidiary | $6,400,000 | |||
|
(Being net assets recognised and investment eliminated) |
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