Porwal Parts acquires all the voting stock of Stonegate Supplies
for $50 million. Stonegate's book value was $11 million at the date
of acquisition, consisting of capital stock of $1 million, retained
earnings of $12 million, and accumulated other comprehensive loss
of $2 million. Stonegate's assets and liabilities are carried at
amounts approximating fair value, and it has no previously
unreported identifiable intangible assets.
Consolidation eliminating entry (E), at the date of acquisition,
includes a(n):
| A. |
$12 million credit to retained earnings |
|
| B. |
$2 million credit to accumulated other comprehensive loss |
|
| C. |
$1 million credit to capital stock |
|
| D. |
$50 million credit to investment in Stonegate |
Answer is option ( d)
$50 million credit to investment in stonegate is the correct answer.
In the books of porwal
Net value of assets and liabilities will be debited and credit to 50 $ million as invest.
Balance amount is transferred to goodwill or capital reserve as the case may be depending upon the value of asset and liability.
Porwal Parts acquires all the voting stock of Stonegate Supplies for $50 million. Stonegate's book value...
Porwal Parts acquires all the voting stock of Stonegate Supplies for $40 million. Stonegate's book value was $10 million at the date of acquisition. Stonegate's assets and liabilities are carried at amounts approximating fair value, but it has previously unrecognized brand names valued at $8,000,000. Consolidation eliminating entry (R), at the date of acquisition, includes a(n): A. $32 million debit to goodwill B. $10 million debit to Stonegate's equity accounts C. $40 million credit to the investment account D. $8...
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Park Corporation acquired the voting stock of Sequoia Company on January 1, 2020 for $25 million in cash and stock. At the date of acquisition, Sequoia's book value totaled $3 million, consisting of $1.6 million in capital stock, $1.8 million in retained earnings, and $400,000 in accumulated other comprehensive losses. Sequoia's reported net assets at the date of acquisition were carried at amounts approximating fair value, except its inventory was overvalued by $500,000 (sold in 2020), its plant assets (10-year...
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Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows: Book Value Dr (Cr) Fair Value Dr (Cr) Current assets $ 500,000 $ 700,000 Land, buildings and equipment (net) 2,000,000 3,500,000 Liabilities (600,000) (550,000) Capital stock (500,000) Retained earnings (1,400,000) In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair...
Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows: Book Value Dr (Cr) Fair Value Dr (Cr) Current assets $ 500,000 $ 700,000 Land, buildings and equipment (net) 2,000,000 3,500,000 Liabilities (600,000) (550,000) Capital stock (500,000) Retained earnings (1,400,000) In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair...
Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows: Book Value Dr (Cr) Fair Value Dr (Cr) Current assets $ 500,000 $ 700,000 Land, buildings and equipment (net) 2,000,000 3,500,000 Liabilities (600,000) (550,000) Capital stock (500,000) Retained earnings (1,400,000) In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair...