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 $
Chapter1: Financial Statements And Business Decisions
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![Consolidation at date of acquisition (purchase price equals book value)
A parent company acquires s 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 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
Accounts receivable
Inventory
Credit
Liabilities and stockholders' equity
Accounts payable
Accrued liabilities
Long-term liabilities
Common stock.
APIC
Retained earnings
Parent Subsidiary
Equity investment
937,500
Property, plant and equipment (PPE), net 9,332,000 764,500
$13,894,500 $1,910,500
$405,000 $226,000
1,280,000 348,000
1,940,000 447,000
$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
$
$
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1b4de786-027f-4714-83b5-f42074d98469%2F7f754d46-eea7-4aad-a683-51bb4b7f4963%2F8hrmmnn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consolidation at date of acquisition (purchase price equals book value)
A parent company acquires s 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 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
Accounts receivable
Inventory
Credit
Liabilities and stockholders' equity
Accounts payable
Accrued liabilities
Long-term liabilities
Common stock.
APIC
Retained earnings
Parent Subsidiary
Equity investment
937,500
Property, plant and equipment (PPE), net 9,332,000 764,500
$13,894,500 $1,910,500
$405,000 $226,000
1,280,000 348,000
1,940,000 447,000
$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
$
$
$
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