REQUIRED 1. Prepare the January 1 journal entry on Son's books to record push-down values. 2. Prepare a balance sheet for Son Corporation immediately after the acquisition on January 1 under push-down accounting.
REQUIRED 1. Prepare the January 1 journal entry on Son's books to record push-down values. 2. Prepare a balance sheet for Son Corporation immediately after the acquisition on January 1 under push-down accounting.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Prepare journal entries and balance sheet under push-down accounting
Book values and fair values of Son Corporation's assets and liabilities on December 31, 2015, are as follows (in
E3-6
thousands):
Book Value
Fair Value
Cash
$ 560
$ 560
640
800
1,600
4,000
2,400
$10,000
$ 800
Accounts receivable-net
640
Inventories
640
Land
1,200
2,800
1,760
$7,600
$ 800
1,120
4,000
1,680
$7,600
Buildings-net
Equipment-net
Accounts payable
Note payable
Capital stock
Retained earnings
1,200
On January 1, 2016, Pop Corporation acquires all of Son's capital stock for $10,000,000 cash. The acquisition is
recorded using push-down accounting.
REQUIRED
1. Prepare the January 1 journal entry on Son's books to record push-down values.
2. Prepare a balance sheet for Son Corporation immediately after the acquisition on January 1 under
push-down accounting.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0c1d6766-4a9d-477b-9498-e1f8446c4165%2F07525948-3101-46a7-9c28-95c8bc3c3a01%2Fcyxhm7f_processed.png&w=3840&q=75)
Transcribed Image Text:Prepare journal entries and balance sheet under push-down accounting
Book values and fair values of Son Corporation's assets and liabilities on December 31, 2015, are as follows (in
E3-6
thousands):
Book Value
Fair Value
Cash
$ 560
$ 560
640
800
1,600
4,000
2,400
$10,000
$ 800
Accounts receivable-net
640
Inventories
640
Land
1,200
2,800
1,760
$7,600
$ 800
1,120
4,000
1,680
$7,600
Buildings-net
Equipment-net
Accounts payable
Note payable
Capital stock
Retained earnings
1,200
On January 1, 2016, Pop Corporation acquires all of Son's capital stock for $10,000,000 cash. The acquisition is
recorded using push-down accounting.
REQUIRED
1. Prepare the January 1 journal entry on Son's books to record push-down values.
2. Prepare a balance sheet for Son Corporation immediately after the acquisition on January 1 under
push-down accounting.
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