Pattern Company purchased 100% of Stock Company on January 2, 2013, for $450,000. At the time,...
Pattern Company purchased 100% of Stock Company on January 2, 2013, for $450,000. At the time, Stock’s capital stock was $300,000, and its retained earnings were $150,000. At the time, Pattern and Stock had no intercompany transactions. Any excess of value implied by the purchase price over book value is attributable to land.
A. Prepare the journal entry to record Pattern’s investment in Stock.
B. Prepare the entry to eliminate Pattern’s investment in Stock.
C. Complete the workpaper.
|
Pattern Company and Stock Company Workpaper January 2, 2013 |
|||||
|
Pattern Company |
Stock Company |
Eliminations |
Cons. Bal. Sheet |
||
|
Debit |
Credit |
||||
|
Assets |
|||||
|
Cash |
$ 200,000 |
$ 50,000 |
|||
|
Accts Receivable |
75,000 |
25,000 |
|||
|
Inventory |
80,000 |
50,000 |
|||
|
Investment in S |
450,000 |
||||
|
Plant & Equip. (Net) |
500,000 |
350,000 |
|||
|
Land |
100,000 |
50,000 |
|||
|
Total Assets |
$1,405,000 |
$525,000 |
|||
|
Liabilities & Equity |
|||||
|
Accounts Payable |
$ 150,000 |
$ 75,000 |
|||
|
Capital Stock |
1,000,000 |
300,000 |
|||
|
Retained Earnings |
255,000 |
150,000 |
|||
|
Total Lia. & Eq. |
$1,405,000 |
$525,000 |
|||
Homework Answers
Answer (a):
Stockholders'equity of Stock Company = $300000 + $150000 = $450,000
Consideration paid = $450,000
As such there is no excess value implied by the purchase price over book value which is attributable to land.
Answer (b):
Answer (c):
Add Answer to:
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On December 31, 2013, Price Company purchased a controlling
interest in Shipley Company. The balance sheet of Price Company and
the consolidated balance sheet on December 3, 2013, were as
follows:
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$23,140
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