Give the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination. Prepare a consolidated balance sheet worksheet.
Give the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination. Prepare a consolidated balance sheet worksheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $207,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
Item | Blank Corporation | Faith Corporation |
---|---|---|
Assets | ||
Cash | $ 66,000 | $ 36,000 |
85,000 | 39,000 | |
Inventory | 107,000 | 65,000 |
Buildings and Equipment (net) | 224,000 | 151,000 |
Investment in Faith Corporation Stock | 207,000 | |
Total Assets | $ 689,000 | $ 291,000 |
Liabilities and |
||
Accounts Payable | $ 82,000 | $ 23,000 |
Notes Payable | 142,000 | 61,000 |
Common Stock | 99,000 | 43,000 |
366,000 | 164,000 | |
Total Liabilities and Stockholders’ Equity | $ 689,000 | $ 291,000 |
At the date of the business combination, the book values of Faith’s net assets and liabilities approximated fair value. Assume that Faith Corporation’s
Required:
- Give the consolidation entry or entries needed to prepare a consolidated
balance sheet immediately following the business combination. - Prepare a consolidated balance sheet worksheet.
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