Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Soda reported $70,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $35,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows:
On December 31, 20X2, Soda purchased inventory for $32,000 and sold it to Pop for $48,000. Pop resold $27,000 of the inventory (i.e., $27,000 of the $48,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3.
During 20X3, Soda sold inventory purchased for $60,000 to Pop for $90,000, and Pop resold all but $24,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,600 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition.
a. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda.
b. Prepare a three-part consolidation worksheet for 20X3.
Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More than Book Value
Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $112,700. At that date, the noncontrolling interest had a fair value of $48,300 and Soda reported $71,000 of common stock outstanding and retained earnings of $31,000. The differential is assigned to buildings and equipment, which had a fair value $28,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $31,000 higher than book value and a...
Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $118,300. At that date, the noncontrolling interest had a fair value of $50,700 and Soda reported $70,000 of common stock outstanding and retained earnings of $31,000. The differential is assigned to buildings and equipment, which had a fair value $24,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $44,000 higher than book value and a...
Pop Corporation acquired 70 percent of Soda Company's voting
common shares on January 1, 20X2, for $109,200. At that date, the
noncontrolling interest had a fair value of $46,800 and Soda
reported $71,000 of common stock outstanding and retained earnings
of $30,000. The differential is assigned to buildings and
equipment, which had a fair value $20,000 higher than book value
and a remaining 10-year life, and to patents, which had a fair
value $35,000 higher than book value and a...
Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $109,200. At that date, the noncontrolling interest had a fair value of $46,800 and Soda reported $71,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $35,000 higher than book value and a...
Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $112,700. At that date, the noncontrolling interest had a fair value of $48,300 and Soda reported $71,000 of common stock outstanding and retained earnings of $31,000. The differential is assigned to buildings and equipment, which had a fair value $28,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $31,000 higher than book value and a...
Chapter 4 Consolidation of Wholly Owned Subsidiaries Acquired ar More than Book Value 179 -12 Consolidation Entries with Differential On June 10, 20X8, Tower Corporation acquired 100 percent of Brown Company's common stock. Sum- marized balance sheet data for the two companies immediately after the stock acquisition are as follows: Tower Corp. Item $ 15,000 30,000 80,000 120,000 100,000 $345,000 Brown Company Book Value Fair Value $ 5,000 $ 5,000 10,000 10,000 20,000 25,000 50,000 70,000 Cash Accounts Receivable Inventory...
pter 5 Consolidation of Less-than-Wholly-Owned Subsidiaries Acquired at More than Bool Vatue E5-3 Consolidation Entries with Differential On June 10, 20X8 , Private Corporation acquired 60 percent of Secret Company's common stock. The fair value of the noncontrolling interest was $32,800 on that date. Summarized balance sheet data for the two companies immediately after the stock purchase are as follows: Secret Company Private Corp. Fair Value Book Value Book Value dvanced udyGuide Item $ 5,000 10,000 5,000 10,000 $ 25,800...
Majority-Owned Subsidiary Acquired et Higher than Book Value LO 5-2 E5-6 Professor Corporation acquired 70 percent of Scholar Corporation's common stock on December 31, 20x4, for $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition Professor Scholar Item Corporation Corporation S s0,300 Cash $ 21,000 Accounts Receivable 90,000 44,000 Inventory 130,000 75,000 Land 60,000...
Pepper Company acquired 90 percent of Salt Company's stock at underlying book value on January 1, 2008. At that date, the fair value of the non-controlling interest was equal to 10 percent of the book value of Salt Company. Salt Co. sold equipment to Pepper Co. for a $360,000 on December 31, 2008. Salt Co. had originally purchased the equipment for $400,000 on January 1, 2005, with a useful life of 10 years and no salvage value. At the time...
Pepper Company acquired 90 percent of Salt Company's stock at underlying book value on January 1, 2008. At that date, the fair value of the non-controlling interest was equal to 10 percent of the book value of Salt Company. Salt Co. sold equipment to Pepper Co. for a $360,000 on December 31, 2008. Salt Co. had originally purchased the equipment for $400,000 on January 1, 2005, with a useful life of 10 years and no salvage value. At the time...