Homework Help is Here – Start Your Trial Now!
Business
Accounting
Required: a. Prepare the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Required: a. Prepare the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Qq.1.

b. Prepare a consolidated balance sheet worksheet. Note: Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Assets PHONE CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X4 Phone Corporation Smart Corporation Consolidation Entries Credit Debit Consolidated
Transcribed Image Text:b. Prepare a consolidated balance sheet worksheet. Note: Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Assets PHONE CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X4 Phone Corporation Smart Corporation Consolidation Entries Credit Debit Consolidated
Phone Corporation acquired 70 percent of Smart Corporation's common stock on December 31, 20X4, for $91,000. At that date, the fair value of the noncontrolling interest was $39,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Smart Corporation Total Assets Accounts Payable Mortgage Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Phone Smart Corporation Corporation $ 60,300 $ 34,000 95,000 52,000 146,000 86,000 65,000 34,000 264,000 412,000 (166,000) 91,000 (79,000) $ 703,300 $ $ 391,000 $ 35,000 247,000 137,500 293,800 66,000 206,000 33,000 76,000 $ 703,300 $ 391,000 At the date of the business combination, the book values of Smart's assets and liabilities approximated fair value except for inventory, which had a fair value of $92,000, and buildings and equipment, which had a fair value of $200,000. At December 31, 20X4, Phone reported accounts payable of $13,300 to Smart, which reported an equal amount in its accounts receivable. Required: a. Prepare the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Transcribed Image Text:Phone Corporation acquired 70 percent of Smart Corporation's common stock on December 31, 20X4, for $91,000. At that date, the fair value of the noncontrolling interest was $39,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Smart Corporation Total Assets Accounts Payable Mortgage Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Phone Smart Corporation Corporation $ 60,300 $ 34,000 95,000 52,000 146,000 86,000 65,000 34,000 264,000 412,000 (166,000) 91,000 (79,000) $ 703,300 $ $ 391,000 $ 35,000 247,000 137,500 293,800 66,000 206,000 33,000 76,000 $ 703,300 $ 391,000 At the date of the business combination, the book values of Smart's assets and liabilities approximated fair value except for inventory, which had a fair value of $92,000, and buildings and equipment, which had a fair value of $200,000. At December 31, 20X4, Phone reported accounts payable of $13,300 to Smart, which reported an equal amount in its accounts receivable. Required: a. Prepare the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Consolidations
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS