ZuoTi.Pro
Question

Punk Corporation purchased 80 percent of Soul Corporation’s stock on January 1, 20X2. At that date,...

Punk Corporation purchased 80 percent of Soul Corporation’s stock on January 1, 20X2. At that date, Soul reported retained earnings of $80,000 and had $120,000 of stock outstanding. The fair value of its buildings was $32,000 more than the book value.

Punk paid $190,000 to acquire the Soul shares. At that date, the no controlling interest had a fair value of $47,500. The remaining economic life for all Soul’s depreciable assets was eight years on the date of combination. The amount of the differential assigned to goodwill is not impaired. Soul reported net income of $40,000 in 20X2 and declared no dividends.

Required:
A. Prepare the consolidation entries needed to prepare a consolidated balance sheet immediately after Punk purchased Soul stock. (Basic consolidation entry and the excess value reclassification entry)

B. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements for 20X2 (Basic consolidation entry, amortized excess value reclassification entry and the excess value reclassification entry)

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Punk Corporation acquired 80% shares for $190000 from Soul corporation . So, Soul corporation becomes Punk's subsidiary. For passing consolidation entry we need to find the values of Identifiable Net Assets, Goodwill and Non controlling Interest ( already given at Fair value i.e $47500)

Calculation Of Identifiable Net Assets $

Share Capital On acquisition date - 120000

retained earnings on acquisition date - 80000

+ Revaluation of building - 32000

Total 232000

Calculation Of Goodwill

Investment in Soul Corporation 190,000

+ Non Controlling Interest (Fair Value) 47,500

- Identifiable Net Assets 232,000

Goodwill 5,500

Hence the Following entry can be passed on consolidation

Identifiable Net Assets Dr. 232000

Goodwill Dr. 5500

To Investments In S Corp 190000

To Non COntrolling Interest 47500

(Being Assets and liabilities of S corp Consolidated)

0 0
Add a comment
Know the answer?
Add Answer to:
Punk Corporation purchased 80 percent of Soul Corporation’s stock on January 1, 20X2. At that date,...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Prime Company holds 80 percent of Suspect Company’s stock, acquired on January 1, 20X2, for $160,000....

    Prime Company holds 80 percent of Suspect Company’s stock, acquired on January 1, 20X2, for $160,000. On the acquisition date, the fair value of the noncontrolling interest was $40,000. Suspect reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Prime uses the fully adjusted equity method in accounting for its investment in Suspect. Trial balance data for the two companies on December 31, 20X6, are as follows: Prime Company Suspect Company Item Debit Credit Debit Credit Cash...

  • Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date...

    Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scrub Company reported assets and liabilities with book values of $439,000 and $179,000, respectively, common stock outstanding of $98,000, and retained earnings of $162,000. The book values and fair values of Scrub’s assets and liabilities were identical except for land, which had increased in value by $19,000, and inventories, which had decreased by $6,000. Required: A. Prepare the following consolidation entries required...

  • Plump Corporation acquired 100 percent of Slim Corporation's common stock on December 31, 20X2, for $239,000....

    Plump Corporation acquired 100 percent of Slim Corporation's common stock on December 31, 20X2, for $239,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Plump Corporation Slim Corporation Cash $ 26,000 $ 18,000 Accounts Receivable 89,000 48,000 Inventory 114,000 60,000 Buildings & Equipment (net) 230,000 158,000 Investment in Slim Corporation Stock 239,000 Total Assets $ 698,000 $ 284,000 Accounts Payable $ 89,000 $ 18,000 Notes Payable 132,000 65,000...

  • Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for...

    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...

  • Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $214,000....

    Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $214,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Blank Corporation Faith Corporation Assets Cash $ 70,000 $ 24,000 Accounts Receivable 87,000 52,000 Inventory 101,000 64,000 Buildings and Equipment (net) 218,000 159,000 Investment in Faith Corporation Stock 214,000 Total Assets $ 690,000 $ 299,000 Liabilities and Stockholders’ Equity Accounts Payable $ 84,000 $...

  • Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $207,000....

    Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $207,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Blank Corporation Faith Corporation Assets Cash $ 62,000 $ 34,000 Accounts Receivable 81,000 39,000 Inventory 103,000 75,000 Buildings and Equipment (net) 212,000 160,000 Investment in Faith Corporation Stock 207,000 Total Assets $ 665,000 $ 308,000 Liabilities and Stockholders’ Equity Accounts Payable $ 84,000 $...

  • Check my work Plump Corporation acquired 100 percent of Slim Corporation's common stock on December 31,...

    Check my work Plump Corporation acquired 100 percent of Slim Corporation's common stock on December 31, 20X2, for $222,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Corporation $ 22,000 41,000 63,000 157,000 Ites Cash Accounts Receivable Inventory Buildings & Equipment (net) Investment in Slim Corporation Stock Total Assets Accounts Payable Notes Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Plump Corporation $ 30,000 103,000 119,000 225,000...

  • Plaza Corporation acquired 100 percent of Square Corporation's voting common stock on December 31, 20X4, for $401,000. At the date of combination, Square reported the following: Assets Liabilities...

    Plaza Corporation acquired 100 percent of Square Corporation's voting common stock on December 31, 20X4, for $401,000. At the date of combination, Square reported the following: Assets Liabilities Cash $ 127,000 Current Liabilities $ 74,000 Inventory 107,000 Long-Term Liabilities 238,000 Buildings (net) 428,000 Common Stock 112,000 Retained Earnings 238,000 Total $ 662,000 Total $ 662,000 At December 31, 20X4, the book values of Square's net assets and liabilities approximated their fair values, except for buildings, which had a fair value...

  • Pizza Corporation purchased 100 percent of the common stock of Slice Corporation on January 1, 20X2,...

    Pizza Corporation purchased 100 percent of the common stock of Slice Corporation on January 1, 20X2, by issuing 48,000 shares of its $7 par value common stock. The market price of Pizza’s shares at the date of issue was $26. Slice reported net assets with a book value of $1,136,000 on that date. The amount paid in excess of the book value of Slice’s net assets was attributed to the increased value of patents held by Slice with a remaining...

  • Price Corporation acquired 100 percent ownership of Saver Company on January 1, 20X8, for $122,400. At...

    Price Corporation acquired 100 percent ownership of Saver Company on January 1, 20X8, for $122,400. At that date, the fair value of Saver's buildings and equipment was $16,000 more than the book value. Accumulated depreciation on this date was $19,000. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, Price's management concluded at December 31, 20X8, that goodwill involved in its acquisition of Saver shares had been impaired and the correct carrying value was $2,500....

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT