Balance Sheet Worksheet with Differential
Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $189,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
Item | Blank Corporation | Faith Corporation |
Cash | $ 26,000 | $ 18,000 |
Accounts Receivable | 87,000 | 37,000 |
Inventory | 110,000 | 60,000 |
Buildings and Equipment (net) | 220,000 | 150,000 |
Investment in Faith Corporation Stock | 189,000 |
|
Total Assets | $632,000 | $265,000 |
Accounts Payable | $ 92,000 | $ 35,000 |
Notes Payable | 150,000 | 80,000 |
Common Stock | 100,000 | 60,000 |
Retained Earnings | 290,000 | 90,000 |
Total Liabilities and Stockholders’ Equity | $632,000 | $265,000 |
At the date of the business combination, Faith’s net assets and liabilities approximated fair value except for inventory, which had a fair value of $84,000, and buildings and equipment (net), which had a fair value of $165,000.
Required
a. Give the eliminating entry or entries needed to prepare a consolidated balance sheet immediately following the business combination.
b. Prepare a consolidation balance sheet worksheet.
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