Question

Cas Papa Burger Inc,has deternined hat the need to ad to their product inc.Thcy have deestin Sloppy Joe Company that would provide significant nfuence and control. The following are the purchase details: On January 1, 2010 the following toolk place Parent Co. paid $ 900,000 Parent Purchased X% of Sub. 1 Complete the REAL ENTRY to record the investment.It has been determined that the Parent Company has signifiant infuence and control Deitr Cledit Date Account Credit Additional Base Information: Subsidiary Equity Position as of 1/'1/2010 Common Stock-Sub APIC-Sub Retained Earnings-Sub 350,000 575,000 55,000 2, re pare the CAD Note: AH1「reviewin , seoppn does accounts tair valiue Ts land Aco a Valu 45,000 Dand 335,000 he Consolidation warl Anipteat aqus ton

Answer 1

Net book Value of Subsidiary's assets	975,000
Fair value differential on land	80,000
Total Fair value of Subsidiary Net assets	1,055,000
Share of Parent (80%)	844,000
Non Controlling Interest (20%)	211,000

Consideration paid by Parent	900,000
Share of parent in net assets	(844,000)
Goodwill	56,000

Consolidation entries for Acquisition

	Debit	Credit	Notes
Goodwill	56,000		Recognition of goodwill on acquisition
Land	80,000		Fair value increase in land on acquisition
Investment in subsidiary		900,000	Elimination of investment in subsidiary
Common Stock Sub	50,000		Elimination of Subsidiary equity
APIC Sub	350,000		Elimination of Subsidiary equity
Retained Earnings Sub	575,000		Elimination of Subsidiary equity
Non Controlling interest		211,000	Apportioning the share of NCI

Consolidation Worksheet

				Elimination Entries
	Pepper	Sloppy		Debit	Credit		Consolidated balance
Assets
Cash	250,000	150,000					400,000
AR	250,000	150,000					400,000
Inventory	200,000	250,000					450,000
Investment in Subsidiary	900,000				900,000		-
Equipments	2,200,000	740,000					2,940,000
Building	550,000	350,000					900,000
Land	120,000	335,000		80,000			535,000
Goodwill				56,000			56,000
Total Assets	4,470,000	1,975,000					5,681,000
Liabilities
AP	500,000	200,000					700,000
ST Debts	850,000	800,000					1,650,000
Mortgage Payable	2,100,000						2,100,000
Total Liabilities	3,450,000	1,000,000					4,450,000
Equity
Common Stock - Papa	60,000						60,000
Common Stock - Sloppy		50,000		50,000			-
APIC - Papa	610,000						610,000
APIC - Sloppy		350,000		350,000			-
RE- Papa	350,000						350,000
RE- Sloppy		575,000		575,000			-
							-
NCI					211,000		211,000
Total Equity	1,020,000	975,000					1,231,000
Total Liabilities and Equity	4,470,000	1,975,000					5,681,000