On December 31, Year 1, P Company purchased 80% of the outstanding shares of S Company for $7,840 cash. The statements of financial position of the two companies immediately after the acquisition transaction appear below P Company S Company Carrying Carrying Amount Amount $ 9,200 7,840 6,260 Plant and equipment (net) Investment in 5 Company Inventory Accounts receivable Cash Ordinary shares Retained earnings Long-term liabilities Other current liabilities Accounts payable 5,350 3,700 $ 32,350 $ 11,600 14,150 4,000 1,100 1,500 $32,350 $ 8,100 $ 6,800 5,000 2,900 2,150 $ 18,150 Fair Value $4,100 6,250 3,100 2,900 1,800 $ 18,150 5,600 2,900 2,150 3,100 2,900 1,800
On December 31, Year 1, P Company purchased 80% of the outstanding shares of S Company for $7,840 cash. The statements of financial position of the two companies immediately after the acquisition transaction appear below P Company S Company Carrying Carrying Amount Amount $ 9,200 7,840 6,260 Plant and equipment (net) Investment in 5 Company Inventory Accounts receivable Cash Ordinary shares Retained earnings Long-term liabilities Other current liabilities Accounts payable 5,350 3,700 $ 32,350 $ 11,600 14,150 4,000 1,100 1,500 $32,350 $ 8,100 $ 6,800 5,000 2,900 2,150 $ 18,150 Fair Value $4,100 6,250 3,100 2,900 1,800 $ 18,150 5,600 2,900 2,150 3,100 2,900 1,800
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
(a) Prepare a consolidated statement of financial position in order of liquidity ie starting with cash at the date of acquisition under each of the following: (i) Identifiable net assets method
Transcribed Image Text:On December 31, Year 1, P Company purchased 80% of the outstanding shares of S Company for $7,840 cash.
The statements of financial position of the two companies immediately after the acquisition transaction appear below.
Plant and equipment (net)
Investment in S Company
Inventory
Accounts receivable
Cash
Ordinary shares
Retained earnings
Long-term liabilities
Other current liabilities
Accounts payable
P Company
Carrying
Amount
$ 9,200
7,840
6,260
5,350
3,700
$ 32,350
$ 11,600
14,150
4,000
1,100
1,500
$32,350
S Company
Carrying
Amount
$ 8,100
5,000
2,900
2,150
$ 18,150
$ 4,100
6,250
3,100
2,900
1,800
$ 18,150
Fair
Value
$ 6,800
5,600
2,900
2,150
3,100
2,900
1,800
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