4.On January 1, 2023, Pantop Corporation acquired 85% of the outstanding common stock of SongCompany for $578,000. There was no control premium.The following information about Song Company on January 1, 2023 was available:Book valueFair valueCashInventoryBuildingTotalAccounts PayableCommon StockAdd. Paid-in CapitalRetained EarningsTotal193,00040,000180,000413,0003,000200,000110,000100,000413,000193,00039,400200,000432,4003,000Pantop uses the complete equity method to account for its investment in Song. During 2023, Songhad a net income of $72,000. The remaining useful life of the building was five years with nosalvage value. Song uses straight line depreciation. Song's cost of goods sold (FIFO) was$50,000 in 2023. On December 23, 2023, Song declared and paid $48,000 cash dividend to itsshareholders. Goodwill was unimpaired as of December 31, 2023.(i) Prepare journal entries for Pantop to record under the complete equity method of accountingthe operating results of Song in 2023.(ii) Prepare the working paper eliminating entries C, E, R, O and N (in journal entry format) forPantop Corporation and subsidiary for the year ended December 31, 2023.

On January 1, 2023, Pantop Corporation acquired 85% of the outstanding common stock of Song Company for $578,000. There was no control premium. The following information about Song Company on January 1, 2023 was available: Book value Fair value Cash Inventory Building Total Accounts Payable Common Stock 193,000 40,000 180,000 413,000 3,000 200,000 193,000 39,400 200,000 432,400 3,000

On January 1, 2023, Pantop Corporation acquired 85% of the outstanding common stock of Song Company for $578,000. There was no control premium. The following information about Song Company on January 1, 2023 was available: Book value Fair value Cash Inventory Building Total Accounts Payable Common Stock 193,000 40,000 180,000 413,000 3,000 200,000 193,000 39,400 200,000 432,400 3,000

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

4.
On January 1, 2023, Pantop Corporation acquired 85% of the outstanding common stock of Song
Company for $578,000. There was no control premium.
The following information about Song Company on January 1, 2023 was available:
Book value
Fair value
Cash
Inventory
Building
Total
Accounts Payable
Common Stock
Add. Paid-in Capital
Retained Earnings
Total
193,000
40,000
180,000
413,000
3,000
200,000
110,000
100,000
413,000
193,000
39,400
200,000
432,400
3,000
Pantop uses the complete equity method to account for its investment in Song. During 2023, Song
had a net income of $72,000. The remaining useful life of the building was five years with no
salvage value. Song uses straight line depreciation. Song's cost of goods sold (FIFO) was
$50,000 in 2023. On December 23, 2023, Song declared and paid $48,000 cash dividend to its
shareholders. Goodwill was unimpaired as of December 31, 2023.
(i) Prepare journal entries for Pantop to record under the complete equity method of accounting
the operating results of Song in 2023.
(ii) Prepare the working paper eliminating entries C, E, R, O and N (in journal entry format) for
Pantop Corporation and subsidiary for the year ended December 31, 2023.

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