On January 1, year 1, Polk Corp. and Strass Corp. had condensed balance sheets as follows: Accounts Polk Strass Current assets $ 70,000 $20,000 Noncurrent assets 90,000 40,000 Total assets $160,000 $60,000
On January 1, year 1, Polk Corp. and Strass Corp. had condensed balance sheets as follows:
Accounts Polk Strass
Current assets $ 70,000 $20,000
Noncurrent assets 90,000 40,000
Total assets $160,000 $60,000
Current liabilities $ 30,000 $10,000
Long-term debt 50,000 --
Total liabilities and SHE $160,000 $60,000
On January 2, year 1, Polk borrowed $60,000 and used the proceeds to purchase 90% of the outstanding common shares of Strass. This debt is payable in ten equal annual principal payments, plus interest, beginning December 30, year 1. The excess cost of the investment over Strass’ book value of acquired net assets should be allocated 60% to inventory and 40% to
Stockholders’ equity including noncontrolling interests should be
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