Prepare the set of consolidated financial statement of financial position on the date of acquisition by showing the consolidation procedures. On January 1, 20X2, Parent Inc. issued 32,000 shares of its P10 par value common stock for all the outstandingshares of Son Company. The fair value of Parent Inc.'s stock is P25 per share. Parent Inc. pays P50,000 inregistering the stocks. Given below are the statements of financial position (SFP) of the companies before theacquisition:Parent Inc.Statement of Financial PositionJanuary 1, 20X2AssetsLiabilities and EquityP200,000 Accounts Payable185,000 Bonds Payable190,000 Common Stock, P10 par value300,000 Additional Paid-In Capital (APIC)740,000 Retained Earnings420,000 Total Liabilities and EquityP2,035,000CashAccounts ReceivableInventoryLandBuilding, net of depreciationEquipment, net of depreciationP210,000420,000400,000500,000505,000P2.035,000Total AssetsSon CompanyStatement of Financial PositionJanuary 1, 20X2Book Value Fair ValueP55,000130,00085,000320,000140,000P730.000Accounts ReceivableP55,000150,000130,000500,000300,000P1,135,000InventoryLandBuilding, net of depreciationEquipment, net of depreciationTotal AssetsAccounts PayableBonds PayableCommon Stock, P2 par valueAdditional Paid-In CapitalRetained EamingsTotal Liabilities and EquityP160,000250,00040,000160,000120,000P730,000P160,000250,000

Consolidated financial statements comprise of the group financial statements in which the…

Answered: Prepare the set of consolidated…

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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Prepare the set of consolidated financial statement of financial position on the date of acquisition by showing the consolidation procedures.

On January 1, 20X2, Parent Inc. issued 32,000 shares of its P10 par value common stock for all the outstanding
shares of Son Company. The fair value of Parent Inc.'s stock is P25 per share. Parent Inc. pays P50,000 in
registering the stocks. Given below are the statements of financial position (SFP) of the companies before the
acquisition:
Parent Inc.
Statement of Financial Position
January 1, 20X2
Assets
Liabilities and Equity
P200,000 Accounts Payable
185,000 Bonds Payable
190,000 Common Stock, P10 par value
300,000 Additional Paid-In Capital (APIC)
740,000 Retained Earnings
420,000 Total Liabilities and Equity
P2,035,000
Cash
Accounts Receivable
Inventory
Land
Building, net of depreciation
Equipment, net of depreciation
P210,000
420,000
400,000
500,000
505,000
P2.035,000
Total Assets
Son Company
Statement of Financial Position
January 1, 20X2
Book Value Fair Value
P55,000
130,000
85,000
320,000
140,000
P730.000
Accounts Receivable
P55,000
150,000
130,000
500,000
300,000
P1,135,000
Inventory
Land
Building, net of depreciation
Equipment, net of depreciation
Total Assets
Accounts Payable
Bonds Payable
Common Stock, P2 par value
Additional Paid-In Capital
Retained Eamings
Total Liabilities and Equity
P160,000
250,000
40,000
160,000
120,000
P730,000
P160,000
250,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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