Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 35,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred: Cost Book Value Fair Value Cash $ 32,000 $ 32,000 $ 32,000 Inventory 83,000 83,000 83,000 Land 69,000 69,000 99,000 Buildings 188,000 147,000 249,000 Equipment 95,000 74,000 123,000 Accounts Payable 58,000 58,000 58,000 Required: Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab
Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 35,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred: Cost Book Value Fair Value Cash $ 32,000 $ 32,000 $ 32,000 Inventory 83,000 83,000 83,000 Land 69,000 69,000 99,000 Buildings 188,000 147,000 249,000 Equipment 95,000 74,000 123,000 Accounts Payable 58,000 58,000 58,000 Required: Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 35,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred:
| Cost | Book Value | Fair Value | |
|---|---|---|---|
| Cash | $ 32,000 | $ 32,000 | $ 32,000 |
| Inventory | 83,000 | 83,000 | 83,000 |
| Land | 69,000 | 69,000 | 99,000 |
| Buildings | 188,000 | 147,000 | 249,000 |
| Equipment | 95,000 | 74,000 | 123,000 |
| Accounts Payable | 58,000 | 58,000 | 58,000 |
Required:
- Prepare the
journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon - Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
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