On January 1, 2005, The Sun Corporation issued 10,000 shares of its own $10 par value common stock for 9,000 shares of the outstanding stock of The Moon Corporation in an acquisition. The Sun common stock at January 1, 2005 was selling at $70 per share. Just before the business combination, balance sheet information of the two corporations was as follows: The Sun The Moon The Moon Book Value Book Value Fair Value Cash 25,000 55,000 12,000 12,000 36,000 Inventories 32,000 Other current assets 110,000 90,000 110,000 Land 100,000 30,000 90,000 Plant and equipment-net 660,000 250,000 375,000 950,000 414,000 623,000 Liabilities 220,000 50,000 50,000 Capital stock, $10 par value Additional paid-in capital 500,000 100,000 170,000 60,000 950,000 40,000 Retained earnings 224,000 414,000 Required: 1. Prepare the Journal Entry on The Sun Corporation's books to account for the business combination. 2. Prepare an Elimination Worksheet Entry. 3. Prepare a Consolidated Balance Sheet Working Papers for The Sun Corporation and Subsidiary immediately after the business combination.

On January 1, 2005, The Sun Corporation issued 10,000 shares of its own $10 par value common stock for 9,000 shares of the outstanding stock of The Moon Corporation in an acquisition. The Sun common stock at January 1, 2005 was selling at $70 per share. Just before the business combination, balance sheet information of the two corporations was as follows: The Sun The Moon The Moon Book Value Book Value Fair Value Cash 25,000 55,000 12,000 12,000 36,000 Inventories 32,000 Other current assets 110,000 90,000 110,000 Land 100,000 30,000 90,000 Plant and equipment-net 660,000 250,000 375,000 950,000 414,000 623,000 Liabilities 220,000 50,000 50,000 Capital stock, $10 par value Additional paid-in capital 500,000 100,000 170,000 60,000 950,000 40,000 Retained earnings 224,000 414,000 Required: 1. Prepare the Journal Entry on The Sun Corporation's books to account for the business combination. 2. Prepare an Elimination Worksheet Entry. 3. Prepare a Consolidated Balance Sheet Working Papers for The Sun Corporation and Subsidiary immediately after the business combination.

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

100%

On January 1, 2005, The Sun Corporation issued 10,000 shares of its own $10 par value common
stock for 9,000 shares of the outstanding stock of The Moon Corporation in an acquisition. The
Sun common stock at January 1, 2005 was selling at $70 per share. Just before the business
combination, balance sheet information of the two corporations was as follows:
The Sun
The Moon
The Moon
Book Value
Book Value
Fair Value
Cash
25,000
12,000
12,000
Inventories
55,000
32,000
36,000
Other current assets
110,000
90,000
110,000
Land
100,000
30,000
90,000
Plant and equipment-net
660,000
250,000
375,000
950,000
414,000
623,000
Liabilities
220,000
50,000
50,000
Capital stock, $10 par value
-in capital
500,000
100,000
Additional
170,000
40,000
Retained earnings
60,000
224,000
950,000
414,000
Required:
1. Prepare the Journal Entry on The Sun Corporation's books to account for the business
combination.
2. Prepare an Elimination Worksheet Entry.
3. Prepare a Consolidated Balance Sheet Working Papers for The Sun Corporation and
Subsidiary immediately after the business combination.

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