Sale of Additional Shares to Parent
Lane Manufacturing Company acquired 75 percent of the stock of Tin Corporation at underlying book value. At the date of acquisition, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Tin Corporation. The balance sheets of the two companies for January 1, 20X1, are as follows:
LANE MANUFACTURING COMPANY Balance Sheet January 1, 20X1 | |||
Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Investment in Tin Products | $ 227,500 60,000 100,000 600,000 (150,000) 262,500 | Accounts Payable Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings | $ 50,000 400,000 200,000 50,000 400,000 |
Total Assets | $1,100,000 | Total Liabilities and Equities | $1,100,000 |
TIN CORPORATION Balance Sheet January 1, 20X1 | |||
Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation | $ 60,000 100,000 180,000 600,000 (240,000) | Accounts Payable Bonds Payable Common Stock ($10 par) Additional Paid-In Capital Retained Earnings | $ 50,000 300,000 100,000 50,000 200,000 |
Total Assets | $700,000 | Total Liabilities and Equities | $700,000 |
On January 2, 20X1, Lane purchased an additional 2,500 shares of common stock directly from Tin for $150,000. Any purchase differential is assigned to buildings and equipment.
Required
a. Prepare the eliminating entry needed to complete a consolidated balance sheet worksheet immediately following the issuance of additional shares to Lane.
b. Prepare a consolidated balance sheet worksheet immediately following the issuance of additional shares to Lane.
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