Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $187,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Item Prince Corporation Sword Company Debit Credit Debit Credit Cash $ 94,000 $ 43,000 Accounts Receivable 59,000 64,000 Inventory 183,000 104,000 Land 92,000 38,000 Buildings and Equipment 496,000 151,000 Investment in Sword Company 248,000 Cost of Goods Sold 496,000 254,000 Depreciation Expense 22,000 12,000 Other Expenses 65,000 65,000 Dividends Declared 51,000 23,000 Accumulated Depreciation $ 153,000 $ 60,000 Accounts Payable 64,000 34,000 Mortgages Payable 192,000 111,000 Common Stock 291,000 40,000 Retained Earnings 335,000 91,000 Sales 687,000 418,000 Income from Sword Company 84,000 $ 1,806,000 $ 1,806,000 $ 754,000 $ 754,000 Additional Information On January 1, 20X7, Sword reported net assets with a book value of $131,000. A total of $23,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7. Sword’s depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. Prince used the equity-method in accounting for its investment in Sword. Detailed analysis of receivables and payables showed that Sword owed Prince $29,000 on December 31, 20X7. Required: Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20X7. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20X7
Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $187,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Item Prince Corporation Sword Company Debit Credit Debit Credit Cash $ 94,000 $ 43,000 Accounts Receivable 59,000 64,000 Inventory 183,000 104,000 Land 92,000 38,000 Buildings and Equipment 496,000 151,000 Investment in Sword Company 248,000 Cost of Goods Sold 496,000 254,000 Depreciation Expense 22,000 12,000 Other Expenses 65,000 65,000 Dividends Declared 51,000 23,000 Accumulated Depreciation $ 153,000 $ 60,000 Accounts Payable 64,000 34,000 Mortgages Payable 192,000 111,000 Common Stock 291,000 40,000 Retained Earnings 335,000 91,000 Sales 687,000 418,000 Income from Sword Company 84,000 $ 1,806,000 $ 1,806,000 $ 754,000 $ 754,000 Additional Information On January 1, 20X7, Sword reported net assets with a book value of $131,000. A total of $23,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7. Sword’s depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. Prince used the equity-method in accounting for its investment in Sword. Detailed analysis of receivables and payables showed that Sword owed Prince $29,000 on December 31, 20X7. Required: Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20X7. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20X7
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity
Section: Chapter Questions
Problem 6RE: Oz Corporation has the following assets at year-end: Patents (net), 26,000; Land, 50,000; Buildings,...
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Question
Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $187,000. The
| Item | Prince Corporation | Sword Company | ||
|---|---|---|---|---|
| Debit | Credit | Debit | Credit | |
| Cash | $ 94,000 | $ 43,000 | ||
| 59,000 | 64,000 | |||
| Inventory | 183,000 | 104,000 | ||
| Land | 92,000 | 38,000 | ||
| Buildings and Equipment | 496,000 | 151,000 | ||
| Investment in Sword Company | 248,000 | |||
| Cost of Goods Sold | 496,000 | 254,000 | ||
| Depreciation Expense | 22,000 | 12,000 | ||
| Other Expenses | 65,000 | 65,000 | ||
| Dividends Declared | 51,000 | 23,000 | ||
| $ 153,000 | $ 60,000 | |||
| Accounts Payable | 64,000 | 34,000 | ||
| Mortgages Payable | 192,000 | 111,000 | ||
| Common Stock | 291,000 | 40,000 | ||
| 335,000 | 91,000 | |||
| Sales | 687,000 | 418,000 | ||
| Income from Sword Company | 84,000 | |||
| $ 1,806,000 | $ 1,806,000 | $ 754,000 | $ 754,000 |
Additional Information
- On January 1, 20X7, Sword reported net assets with a book value of $131,000. A total of $23,000 of the acquisition price is applied to
goodwill , which was not impaired in 20X7. - Sword’s
depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. - Prince used the equity-method in accounting for its investment in Sword.
- Detailed analysis of receivables and payables showed that Sword owed Prince $29,000 on December 31, 20X7.
Required:
- Prepare all
journal entries recorded by Prince with regard to its investment in Sword during 20X7. - Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20X7
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