10) P Company purchased 90% of the outstanding common stock of S Company on January 1,...
10) P Company purchased 90% of the outstanding common stock of S Company on January 1, 2013 . S Company’s stockholders’ equity at various dates was:
|
1/1/13 |
1/1/17 |
12/31/17 |
|
|
Common stock |
$400,000 |
$400,000 |
$400,000 |
|
Retained earnings |
120,000 |
380,000 |
460,000 |
|
Total |
$520,000 |
$780,000 |
$860,000 |
The workpaper entry to establish reciprocity under the cost method in the preparation of a consolidated statements workpaper on December 31, 2017 should include a credit to P Company’s retained earnings of:
a) $80,000.
b) $234,000.
c) $260,000.
d) $306,000.
Need an explanation on the question, thank you
Homework Answers
| Total retained earnings as on | 31-Dec-17 | $460,000 | |
| Total retained earnings as on | 01-Jan-13 | $120,000 | |
| Total retained earnings after acquisition | $340,000 | ||
| P company's share 90% | $306,000 | (340000*90%) | |
| (d) 306,000 | |||
| Total till 306,000 has been credited to retained earnings. | |||
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10) P Company purchased 90% of the outstanding common stock of S
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date was: *
a) $120,000
b) $175,000
c) $125,000
d)...
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1) The balance of common stock of S Co. at acquisition
date was: *
a) $1,625,000
b) $1,850,000
c) $2,000,000
d) $1,960,000
2) The eliminating entries for a consolidated statements workpaper
on December 31, 2019, will include: *
a) Debit Investment in S Co. $2,080,000
b) Credit Retained Earnings $600,000
c) Credit Dividends Declared $160,000
d) Debit Dividend Income $128,000
3) The difference between implied and book value at acquisition
date was: *
a) $120,000
b) $175,000
c) $125,000
d)...
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