Pesto Corporation acquired 80 percent of Sauce Corporation's common stock on January 1, 20X7, for $336,000 in cash. At the acquisition date, the book values and fair values of Sauce's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Sauce. The stockholders' equity accounts of the two companies at the date of purchase are as follows: Common Stock ($10 par value) Additional Paid-In Capital I Retained Earnings. Total Stockholders' Equity Pesto Corporation. $ 396,000 232,000 352,000 $ 980,000 Sauce Corporation $ 174,000 69,000 177,000 $ 420,000 Required: a. What amount will be assigned to the noncontrolling interest on January 1, 20X7, in the consolidated balance sheet? b. Prepare the stockholders' equity section of Pesto and Sauce's consolidated balance sheet as of January 1, 20X7.

Pesto Corporation acquired 80 percent of Sauce Corporation's common stock on January 1, 20X7, for $336,000 in cash. At the acquisition date, the book values and fair values of Sauce's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Sauce. The stockholders' equity accounts of the two companies at the date of purchase are as follows: Common Stock ($10 par value) Additional Paid-In Capital I Retained Earnings. Total Stockholders' Equity Pesto Corporation. $ 396,000 232,000 352,000 $ 980,000 Sauce Corporation $ 174,000 69,000 177,000 $ 420,000 Required: a. What amount will be assigned to the noncontrolling interest on January 1, 20X7, in the consolidated balance sheet? b. Prepare the stockholders' equity section of Pesto and Sauce's consolidated balance sheet as of January 1, 20X7.

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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