Consolidation at date of acquisition (purchase price equals book value) A parent company acquires its subsidiary by exchanging 37,500 shares of its Common Stock, with a market value on the acquisition date of $25 per share, for all of the outstanding voting shares of the investee. a. What is the total fair value of the subsidiary on the acquisition date? $ b. Given the balance sheets of the parent and subsidiary in c. below, prepare the consolidation entry or entries on the date of acquisition. Consolidation Worksheet Debit Description. [E] Common stock. APIC Assets Cash c. Prepare the consolidated balance sheet on the date of acquisition. + # Balance Sheet Parent Subsidiary $405,000 $226,000 Accounts receivable Inventory 1,280,000 348,000 1,940,000 447,000 937,500 Equity investment Property, plant and equipment (PPE), net 9,332,000 764,500 $13,894,500 $1,910,500 Liabilities and stockholders' equity Accounts payable Accrued liabilities. Long-term liabilities Common stock Credit APIC Retained earnings $627,000 $127,000 736,000 221,000 3,000,000 500,000 1,370,000 100,000 3,137,500 125,000 5,024,000 712,500 $13,894,500 $1,910,500 Elimination Entries Dr Cr Consolidated $

Consolidation at date of acquisition (purchase price equals book value) A parent company acquires its subsidiary by exchanging 37,500 shares of its Common Stock, with a market value on the acquisition date of $25 per share, for all of the outstanding voting shares of the investee. a. What is the total fair value of the subsidiary on the acquisition date? $ b. Given the balance sheets of the parent and subsidiary in c. below, prepare the consolidation entry or entries on the date of acquisition. Consolidation Worksheet Debit Description. [E] Common stock. APIC Assets Cash c. Prepare the consolidated balance sheet on the date of acquisition. + # Balance Sheet Parent Subsidiary $405,000 $226,000 Accounts receivable Inventory 1,280,000 348,000 1,940,000 447,000 937,500 Equity investment Property, plant and equipment (PPE), net 9,332,000 764,500 $13,894,500 $1,910,500 Liabilities and stockholders' equity Accounts payable Accrued liabilities. Long-term liabilities Common stock Credit APIC Retained earnings $627,000 $127,000 736,000 221,000 3,000,000 500,000 1,370,000 100,000 3,137,500 125,000 5,024,000 712,500 $13,894,500 $1,910,500 Elimination Entries Dr Cr Consolidated $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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