Problem

Pin Corporation purchased 960,000 shares of Sit Corporation’s common stock (an 80 percent...

Pin Corporation purchased 960,000 shares of Sit Corporation’s common stock (an 80 percent interest) for $21,200,000 on January 1, 2011. The $2,000,000 excess of investment fair value over book value acquired was goodwill.

On January 1, 2013, Sit sold 400,000 previously unissued shares of common stock to the public for $30 per share. Sit’s stockholders’ equity on January 1, 2011, when Pin acquired its interest, and on January 1, 2013, immediately before and after the issuance of additional shares, was as follows (in thousands):

 

January 1, 2011

January 1, 2013 Before Issuance

January 1, 2013 After Issuance

Common stock, $10 par

$12,000

$12,000

$16,000

Other paid-in capital

4,000

4,000

12,000

Retained earnings

8,000

10,000

10,000

Total

$24,000

$26,000

$38,000

REQUIRED

1. Calculate the balance of Pin’s Investment in Sit account on January 1, 2013, before the additional stock issuance.


2. Determine Pin’s percentage interest in Sit on January 1, 2013, immediately after the additional stock issuance.


3. Prepare a journal entry on Pin’s books to adjust for the additional share issuance on January 1, 2013, if gain or loss is not recognized.

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search
Solutions For Problems in Chapter 8