Question

Pab Corporation decided to establish Sollon Company as a wholly-owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 30,000 shares of $6 par value common stock. The following information is provided on the assets and accounts payable transferred 

	Cost	Book Value	Fair Value
Cash	$25,000	$25.000	$25,000
Inventory	70,000	70,000	70,000
Land	60.000	60,000	90,000
Buildings	170,000	130,000	240,000
Equipment	90,000	80,000	105.000
Accounts Payable	45,000	45.000	45.000

Required 

a. Give the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon. 

b. Give the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.

Answer 1

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