hrough the payment of $10,468,000 in cash, Drexel Company acquires voting control over Young Company. This price is paid for 60 ercent of the subsidiary's 100,000 outstanding common shares ($40 par value) as well as all 10,000 shares of 8 percent, cumulative. 100 par value preferred stock. Of the total payment, $3.1 million is attributed to the fully participating preferred stock with the mainder paid for the common. This acquisition is carried out on January 1, 2021, when Young reports retained earnings of $10 million nd a total book value of $15 million. The acquisition-date fair value of the noncontrolling interest in Young's common stock was 4.912.000. On this same date, a building owned by Young (with a five-year remaining life) is undervalued in the financial records by 200,000, while equipment with a 10-year remaining life is overvalued by $100,000. Any further excess acquisition-date fair value is ssigned to a brand name with a 20-year remaining life. uring 2021, Young reports net income of $900,000 while declaring $400,000 in cash dividends. Drexel uses the initial value method account for both of these investments. repare appropriate consolidation entries for 2021. (If no entry is required for a transaction/event, select "No journal entry required" the first account field. Enter your answers in whole dollars and not in millions.) view transaction list Consolidation Worksheet Entries 1 2 Prepare a combined entry for Consolidation Entries S and A.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Problem 6-34 (Static) (LO 6-4)
Through the payment of $10,468,000 in cash, Drexel Company acquires voting control over Young Company. This price is paid for 60
percent of the subsidiary's 100,000 outstanding common shares ($40 par value) as well as all 10,000 shares of 8 percent, cumulative,
$100 par value preferred stock. Of the total payment, $3.1 million is attributed to the fully participating preferred stock with the
remainder paid for the common. This acquisition is carried out on January 1, 2021, when Young reports retained earnings of $10 million
and a total book value of $15 million. The acquisition-date fair value of the noncontrolling interest in Young's common stock was
$4,912,000. On this same date, a building owned by Young (with a five-year remaining life) is undervalued in the financial records by
$200,000, while equipment with a 10-year remaining life is overvalued by $100,000. Any further excess acquisition-date fair value is
assigned to a brand name with a 20-year remaining life.
During 2021, Young reports net income of $900,000 while declaring $400,000 in cash dividends. Drexel uses the initial value method
to account for both of these investments.
Prepare appropriate consolidation entries for 2021. (If no entry is required for a transaction/event, select "No journal entry required"
in the first account field. Enter your answers in whole dollars and not in millions.)
view transaction list
Consolidation
Worksheet Entries
<
1 2 3 4
Prepare a combined entry for Consolidation Entries S and A.
Note: Enter debits before credits.
Transaction
1
Accounts
Debit
Credit
>
Transcribed Image Text:Problem 6-34 (Static) (LO 6-4) Through the payment of $10,468,000 in cash, Drexel Company acquires voting control over Young Company. This price is paid for 60 percent of the subsidiary's 100,000 outstanding common shares ($40 par value) as well as all 10,000 shares of 8 percent, cumulative, $100 par value preferred stock. Of the total payment, $3.1 million is attributed to the fully participating preferred stock with the remainder paid for the common. This acquisition is carried out on January 1, 2021, when Young reports retained earnings of $10 million and a total book value of $15 million. The acquisition-date fair value of the noncontrolling interest in Young's common stock was $4,912,000. On this same date, a building owned by Young (with a five-year remaining life) is undervalued in the financial records by $200,000, while equipment with a 10-year remaining life is overvalued by $100,000. Any further excess acquisition-date fair value is assigned to a brand name with a 20-year remaining life. During 2021, Young reports net income of $900,000 while declaring $400,000 in cash dividends. Drexel uses the initial value method to account for both of these investments. Prepare appropriate consolidation entries for 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in millions.) view transaction list Consolidation Worksheet Entries < 1 2 3 4 Prepare a combined entry for Consolidation Entries S and A. Note: Enter debits before credits. Transaction 1 Accounts Debit Credit >
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Consolidations
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education