On June 10, 20X8, Private Corporation acquired 60 percent of Secret Company’s common stock. The fair value of the noncontrolling interest was $32,800 on that date. Summarized balance sheet data for the two companies immediately after the stock purchase are as follows: Item Private Corporation Secret Company Book Value Book Value Fair Value Cash $ 25,800 $ 5,000 $ 5,000 Accounts Receivable 30,000 10,000 10,000 Inventory 80,000 20,000 25,000 Buildings and Equipment (net) 120,000 50,000 70,000 Investment in Secret Company 49,200 Total $ 305,000 $ 85,000 $ 110,000 Accounts Payable $ 25,000 $ 3,000 $ 3,000 Bonds Payable 150,000 25,000 25,000 Common Stock 55,000 20,000 Retained Earnings 75,000 37,000 Total $ 305,000 $ 85,000 $ 28,000 Required: a. Record the consolidation entries required to prepare a consolidated balance sheet immediately after the purchase of Secret Company shares.
On June 10, 20X8, Private Corporation acquired 60 percent of Secret Company’s common stock. The fair value of the noncontrolling interest was $32,800 on that date. Summarized balance sheet data for the two companies immediately after the stock purchase are as follows: Item Private Corporation Secret Company Book Value Book Value Fair Value Cash $ 25,800 $ 5,000 $ 5,000 Accounts Receivable 30,000 10,000 10,000 Inventory 80,000 20,000 25,000 Buildings and Equipment (net) 120,000 50,000 70,000 Investment in Secret Company 49,200 Total $ 305,000 $ 85,000 $ 110,000 Accounts Payable $ 25,000 $ 3,000 $ 3,000 Bonds Payable 150,000 25,000 25,000 Common Stock 55,000 20,000 Retained Earnings 75,000 37,000 Total $ 305,000 $ 85,000 $ 28,000 Required: a. Record the consolidation entries required to prepare a consolidated balance sheet immediately after the purchase of Secret Company shares.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On June 10, 20X8, Private Corporation acquired 60 percent of Secret Company’s common stock. The fair value of the noncontrolling interest was $32,800 on that date. Summarized
| Item | Private Corporation | Secret Company | |
|---|---|---|---|
| Book Value | Book Value | Fair Value | |
| Cash | $ 25,800 | $ 5,000 | $ 5,000 |
| 30,000 | 10,000 | 10,000 | |
| Inventory | 80,000 | 20,000 | 25,000 |
| Buildings and Equipment (net) | 120,000 | 50,000 | 70,000 |
| Investment in Secret Company | 49,200 | ||
| Total | $ 305,000 | $ 85,000 | $ 110,000 |
| Accounts Payable | $ 25,000 | $ 3,000 | $ 3,000 |
| Bonds Payable | 150,000 | 25,000 | 25,000 |
| Common Stock | 55,000 | 20,000 | |
| 75,000 | 37,000 | ||
| Total | $ 305,000 | $ 85,000 | $ 28,000 |
Required:
a. Record the consolidation entries required to prepare a consolidated balance sheet immediately after the purchase of Secret Company shares.
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