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 Current Assets Long-Term Assets (net) Total $ 220,000 420,000 $ 640,000 Liabilities Current Liabilities Long-Term Liabilities Common Stock Retained Earnings Total $ 80,000 200,000 120,000 240,000 $ 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 entries needed to prepare a consolidated balance sheet at December 31, 20X4. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
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 Current Assets Long-Term Assets (net) Total $ 220,000 420,000 $ 640,000 Liabilities Current Liabilities Long-Term Liabilities Common Stock Retained Earnings Total $ 80,000 200,000 120,000 240,000 $ 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 entries needed to prepare a consolidated balance sheet at December 31, 20X4. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
Current Assets
Long-Term Assets (net)
Total
view transaction list
Consolidation
Worksheet Entries
$ 220,000
420,000
A
$ 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.
B
Liabilities
Current Liabilities
Long-Term Liabilities
Common Stock
Retained Earnings
Total
Required:
Prophet Corporation wishes to prepare a consolidated balance sheet immediately following the business combination. Prepare the
consolidation entry or entries needed to prepare a consolidated balance sheet at December 31, 20X4.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
$ 80,000
200,000
120,000
240,000
$ 640,000
Record the excess value (differential) reclassification entry.
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