Exercise 5-11 (Static) Consolidation after One Year of Ownership LO 5-2 Punk Corporation purchased 80 percent of Soul Corporation's stock on January 1, 20X2. At that date, Soul reported retained earnings of $80,000 and had $120,000 of stock outstanding. The fair value of its buildings was $32,000 more than the book value. Punk paid $190,000 to acquire the Soul shares. At that date, the noncontrolling interest had a fair value of $47,500. The remaining economic life for all Soul's depreciable assets was eight years on the date of combination. The amount of the differential assigned to goodwill is not impaired. Soul reported net income of $40,000 in 20X2 and declared no dividends. Required: a. Prepare the consolidation entries needed to prepare a consolidated balance sheet immediately after Punk purchased Soul stock Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No Entry 1 2 transaction list Accounts Investment in Soul Corporation Cash Common stock Retained earings Investment in Soul Corporation NCI in NetAssets of SoulCorporation Debit 190,000 120,000 80,000 Credit 190,000 160,000 40,000

Exercise 5-11 (Static) Consolidation after One Year of Ownership LO 5-2 Punk Corporation purchased 80 percent of Soul Corporation's stock on January 1, 20X2. At that date, Soul reported retained earnings of $80,000 and had $120,000 of stock outstanding. The fair value of its buildings was $32,000 more than the book value. Punk paid $190,000 to acquire the Soul shares. At that date, the noncontrolling interest had a fair value of $47,500. The remaining economic life for all Soul's depreciable assets was eight years on the date of combination. The amount of the differential assigned to goodwill is not impaired. Soul reported net income of $40,000 in 20X2 and declared no dividends. Required: a. Prepare the consolidation entries needed to prepare a consolidated balance sheet immediately after Punk purchased Soul stock Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No Entry 1 2 transaction list Accounts Investment in Soul Corporation Cash Common stock Retained earings Investment in Soul Corporation NCI in NetAssets of SoulCorporation Debit 190,000 120,000 80,000 Credit 190,000 160,000 40,000

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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P 4-2 Workpapers and financial statements in year of acquisition Pop Corporation acquired 70 percent of the outstanding voting stock of Son Corporation for $182,000 cash on January 1, 2016, when Son’s stockholders’ equity was $260,000. All the assets and liabilities of Son were stated at fair values (equal to book values) when Pop acquired its 70 percent interest. Financial statements of the two corporations at and for the year ended December 31, 2016, are summarized as follows (in thousands): Pop Son Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales $1,240 $400 Income from Son 42 — Cost of goods sold (800) (260) Operating expenses (308) (80) Net income 174 60 Add: Retained earnings January 1 260 44 Deduct: Dividends (120) (40) Retained earnings December 31 $ 314 $ 64 Balance Sheet at December 31 Cash $ 182 $ 60 Receivables—net…
QUESTION 40 Prime Company acquired 100 percent of the voting common shares of Standard Video Corporation, its bitter rival, by issuing bonds with a par value and fair value of $150,000. Immediately prior to the acquisition, Prime reported total assets of $500,000, liabilities of $280,000, and stockholders' equity of $220,000. At that date, Standard Video reported total assets of $400,000, liabilities of $250,000, and stockholders' equity of $150,000. Included in Standard's liabilities was an account payable to Prime in the amount of $20,000, which Prime included in its accounts receivable.Based on the preceding information, what amount of total assets did Prime report in its separate balance sheet immediately after the acquisition before any consolidation with Standard Video? $900,000 $750,000 $500,000 $650,000
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Exercise 5-7 (Static) Consolidation with Noncontrolling Interest LO 5-2 Prophet Corporation acquired 75 percent of Seer Corporation’s voting common stock on December 31, 20X4, for $390,000. At the date of combination, Seer reported the following: Assets Liabilities Current Assets $ 220,000 Current Liabilities $ 80,000 Long-Term Assets (net) 420,000 Long-Term Liabilities 200,000 Common Stock 120,000 Retained Earnings 240,000 Total $ 640,000 Total $ 640,000 At December 31, 20X4, the book values of Seer's net assets and liabilities approximated their fair values, except for buildings, which had a fair value of $80,000 more than book value, and inventories, which had a fair value of $36,000 more than book value. The fair value of the noncontrolling interest was determined to be $130,000 at that date. Required: Prophet Corporation wishes to prepare a consolidated balance sheet immediately following the business combination. Prepare the consolidation entry or…
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