Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000. At that date, the fair value of the noncontrolling interest was $42,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Phone Corporation Smart Corporation Cash $ 52,300 $ 39,000 Accounts Receivable 99,000 59,000 Inventory 136,000 92,000 Land 66,000 49,000 Buildings & Equipment 417,000 268,000 Less: Accumulated Depreciation (151,000) (73,000) Investment in Smart Corporation 98,000 Total Assets $ 717,300 $ 434,000 Accounts Payable $ 141,500 $ 27,000 Mortgage Payable 300,800 288,000 Common Stock 72,000 40,000 Retained Earnings 203,000 79,000 Total Liabilities & Stockholders’ Equity $ 717,300 $ 434,000 At the date of the business combination, the book values of Smart’s assets and liabilities approximated fair value except for inventory, which had a fair value of $98,000, and buildings and equipment, which had a fair value of $210,000. At December 31, 20X4, Phone reported accounts payable of $13,600 to Smart, which reported an equal amount in its accounts receivable. Prepare a consolidated balance sheet in good form.
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000. At that date, the fair value of the noncontrolling interest was $42,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Phone Corporation Smart Corporation Cash $ 52,300 $ 39,000 Accounts Receivable 99,000 59,000 Inventory 136,000 92,000 Land 66,000 49,000 Buildings & Equipment 417,000 268,000 Less: Accumulated Depreciation (151,000) (73,000) Investment in Smart Corporation 98,000 Total Assets $ 717,300 $ 434,000 Accounts Payable $ 141,500 $ 27,000 Mortgage Payable 300,800 288,000 Common Stock 72,000 40,000 Retained Earnings 203,000 79,000 Total Liabilities & Stockholders’ Equity $ 717,300 $ 434,000 At the date of the business combination, the book values of Smart’s assets and liabilities approximated fair value except for inventory, which had a fair value of $98,000, and buildings and equipment, which had a fair value of $210,000. At December 31, 20X4, Phone reported accounts payable of $13,600 to Smart, which reported an equal amount in its accounts receivable. Prepare a consolidated balance sheet in good form.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000. At that date, the fair value of the noncontrolling interest was $42,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
| Item | Phone Corporation | Smart Corporation |
|---|---|---|
| Cash | $ 52,300 | $ 39,000 |
| 99,000 | 59,000 | |
| Inventory | 136,000 | 92,000 |
| Land | 66,000 | 49,000 |
| Buildings & Equipment | 417,000 | 268,000 |
| Less: |
(151,000) | (73,000) |
| Investment in Smart Corporation | 98,000 | |
| Total Assets | $ 717,300 | $ 434,000 |
| Accounts Payable | $ 141,500 | $ 27,000 |
| Mortgage Payable | 300,800 | 288,000 |
| Common Stock | 72,000 | 40,000 |
| 203,000 | 79,000 | |
| Total Liabilities & |
$ 717,300 | $ 434,000 |
At the date of the business combination, the book values of Smart’s assets and liabilities approximated fair value except for inventory, which had a fair value of $98,000, and buildings and equipment, which had a fair value of $210,000. At December 31, 20X4, Phone reported accounts payable of $13,600 to Smart, which reported an equal amount in its accounts receivable.
Prepare a consolidated
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