Question

Option #1: Consolidation at Date Acquisition, Ownership < 100%, FMV>BV. Assume that a parent company acquires a 70% interest in a subsidiary for a purchase price of $1,078,000. The excess of total fair value of controlling and noncontrolling interests over book value is assigned to; a building (PPE net) that is worth $100,000 more than book value, an unrecorded patent valued at $200,000 and goodwill valued at $300,000. Goodwill is assigned proportionately to the controlling and noncontrolling interests. Submission Requirements: Using the ACT470_Mod03-Option01.xlsx Excel spreadsheet in the Module 3 folder: • Prepare the consolidated balance sheet at the date of acquisition by placing the appropriate entries in their respective debit/credit column cells. • Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is an [E] or [A] entry. • Use Excel formulas to derive the Consolidated column amounts and totals. • Using the "Home" key in Excel, go to the "Styles" area and highlight the [E] and [A] entry cells in different shades. • Review the grading rubric following this assignment, to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.

Answer 1

ACT470-Module 3-Option 1
			Cosolidation Entries
	Parent	Subsidary		Dr		Cr	Consolidated
Cash	920,000.00	215,000.00	[A]	1,135,000.00	[E]	1,078,000.00	57,000.00
Accounts Recievable	782,000.00	330,000.00	[A]	1,112,000.00			1,112,000.00
Inventory	1,100,000.00	425,000.00	[A]	1,525,000.00			1,525,000.00
Equity	1,078,000.00		[A]	1,078,000.00			1,078,000.00
PPE Net	5,400,000.00	800,000.00	[A]	6,300,000.00			6,300,000.00
Patent	-	-	[A]	200,000.00			200,000.00
Goodwill	-	-	[A]	300,000.00			300,000.00
Total assets	9,280,000.00	1,770,000.00		11,650,000.00			10,572,000.00
Current liabilities	810,000.00	330,000.00			[A]	1,140,000.00	1,140,000.00
Long-ter liabilities	4,000,000.00	500,000.00			[A]	4,500,000.00	4,500,000.00
Common stock	920,000.00	90,000.00			[E]	920,000.00	920,000.00
Additional paid-in capial	700,000.00	120,000.00			[E]	700,000.00	700,000.00
Retained earnings	2,850,000.00	730,000.00			[E]	2,850,000.00	2,850,000.00
NCI					[A]	462,000.00	462,000.00
Total liabilities and equity	9,280,000.00	1,770,000.00				10,572,000.00	10,572,000.00