Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scru Company reported assets and liabilities with book values of $431,000 and $181,000, respectively, common stock outstanding $99,000, and retained earnings of $151,000. The book values and fair values of Scrub's assets and liabilities were identical e. for land, which had increased in value by $17,000, and inventories, which had decreased by $6,000. Required:
Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scru Company reported assets and liabilities with book values of $431,000 and $181,000, respectively, common stock outstanding $99,000, and retained earnings of $151,000. The book values and fair values of Scrub's assets and liabilities were identical e. for land, which had increased in value by $17,000, and inventories, which had decreased by $6,000. Required:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scrub
Company reported assets and liabilities with book values of $431,000 and $181,000, respectively, common stock outstanding of
$99,000, and retained earnings of $151,000. The book values and fair values of Scrub's assets and liabilities were identical except
for land, which had increased in value by $17,000, and inventories, which had decreased by $6,000.
Required:
a. Prepare the following consolidation entries required to prepare a consolidated balance sheet immediately after the business
combination assuming Power acquired its ownership of Scrub for $275,000. (If no entry is required for a transaction/event, select
"No journal entry required" in the first account field.)
No
A
B
Event
1
2
X Answer is not complete.
Land
Goodwill
Accounts
Common stock
Retained earnings
Investment in Scrub Company
Inventories
Investment in Scrub Company
✓
›› › ›
Debit
99,000
151,000✔
17,000
Credit
250,000
6,000
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