Protec Company acquired 75% of Sussex Company's voting stock for $30,000 in cash. The noncontrolling interest...
Protec Company acquired 75% of Sussex Company's voting stock for $30,000 in cash. The noncontrolling interest had an estimated fair value of $9,500. Some of Sussex's identifiable assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
|
Book Value |
Fair Value |
|
|
Property, net |
$ 2,000 |
$ 7,000 |
|
Identifiable intangibles |
0 |
20,000 |
Sussex's total shareholders' equity at the date of acquisition was
as follows:
|
Capital stock |
$ 1,000 |
|
Retained earnings |
3,000 |
|
Accumulated other comprehensive income |
100 |
|
Total |
$ 4,100 |
On a date-of-acquisition consolidation working paper, eliminating
entry (E) credits Investment in Sussex in the amount of
| A. |
$ 4,100 |
|
| B. |
$ 3,075 |
|
| C. |
$ 7,500 |
|
| D. |
$21,825 |
Homework Answers
Answer is option B
|
B. |
$ 3,075 |
|
No. |
Account titles and explanation |
Debit |
Credit |
|
Entry E |
Capital stock |
1000 |
|
|
Retained earnings |
3000 |
||
|
Accumulated other comprehensive income |
100 |
||
|
Investment in Sussex (4100*75%) |
3075 |
||
|
Noncontrolling interest in Sussex (4100*25%) |
1025 |
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