Prophet Corporation acquired 75 percent of Seer Corporation’s voting common stock on December 31, 20X4, for $390,000. At the date of combination, Seer reported the following: Assets Liabilities Current Assets $ 220,000 Current Liabilities $ 80,000 Long-Term Assets (net) 420,000 Long-Term Liabilities 200,000 Common Stock 120,000 Retained Earnings 240,000 Total $ 640,000 Total $ 640,000 At December 31, 20X4, the book values of Seer's net assets and liabilities approximated their fair values, except for buildings, which had a fair value of $80,000 more than book value, and inventories, which had a fair value of $36,000 more than book value. The fair value of the noncontrolling interest was determined to be $130,000 at that date. Required: Prophet Corporation wishes to prepare a consolidated balance sheet immediately following the business combination. Prepare the consolidation entry or entries needed to prepare a consolidated balance sheet at December 31, 20X4. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. a) Record the basic consolidation entry. b) Record the excess value (differential) reclassification entry.
Prophet Corporation acquired 75 percent of Seer Corporation’s voting common stock on December 31, 20X4, for $390,000. At the date of combination, Seer reported the following: Assets Liabilities Current Assets $ 220,000 Current Liabilities $ 80,000 Long-Term Assets (net) 420,000 Long-Term Liabilities 200,000 Common Stock 120,000 Retained Earnings 240,000 Total $ 640,000 Total $ 640,000 At December 31, 20X4, the book values of Seer's net assets and liabilities approximated their fair values, except for buildings, which had a fair value of $80,000 more than book value, and inventories, which had a fair value of $36,000 more than book value. The fair value of the noncontrolling interest was determined to be $130,000 at that date. Required: Prophet Corporation wishes to prepare a consolidated balance sheet immediately following the business combination. Prepare the consolidation entry or entries needed to prepare a consolidated balance sheet at December 31, 20X4. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. a) Record the basic consolidation entry. b) Record the excess value (differential) reclassification entry.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 5-7 (Static) Consolidation with Noncontrolling Interest LO 5-2
Prophet Corporation acquired 75 percent of Seer Corporation’s voting common stock on December 31, 20X4, for $390,000. At the date of combination, Seer reported the following:
| Assets | Liabilities | ||
|---|---|---|---|
| Current Assets | $ 220,000 | Current Liabilities | $ 80,000 |
| Long-Term Assets (net) | 420,000 | Long-Term Liabilities | 200,000 |
| Common Stock | 120,000 | ||
| 240,000 | |||
| Total | $ 640,000 | Total | $ 640,000 |
At December 31, 20X4, the book values of Seer's net assets and liabilities approximated their fair values, except for buildings, which had a fair value of $80,000 more than book value, and inventories, which had a fair value of $36,000 more than book value. The fair value of the noncontrolling interest was determined to be $130,000 at that date.
Required:
Prophet Corporation wishes to prepare a consolidated balance sheet immediately following the business combination. Prepare the consolidation entry or entries needed to prepare a consolidated balance sheet at December 31, 20X4.
Note: If no entry is required for a transaction/event, select "No
a) Record the basic consolidation entry.
b) Record the excess value (differential) reclassification entry.
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