The consolidated balance sheet for P and S Companies on the date of acquisition will include: * O Investment in S Co. of $0 Common Stock of $640,000 Retained Earnings of $136,000 Long-term notes payable of $30,000 None of the options is correct O O O O

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The consolidated balance sheet for P
and S Companies on the date of
acquisition will include: *
Investment in S Co. of $0
Common Stock of $640,000
Retained Earnings of $136,000
Long-term notes payable of $30,000
None of the options is correct
Transcribed Image Text:The consolidated balance sheet for P and S Companies on the date of acquisition will include: * Investment in S Co. of $0 Common Stock of $640,000 Retained Earnings of $136,000 Long-term notes payable of $30,000 None of the options is correct
P Company purchased 80% of the
outstanding common stock of S
Company on January 2, 2011, for
$360,000. And any difference
between the value implied by the
purchase price of the investment and
the book value of net assets acquired
relates to subsidiary land. The book
values of S Company's other assets
and liabilities are equal to their fair
values. Balance sheets for P
Company and S Company
immediately after the stock
acquisition were as follows:
P Company
$ 166,000
S Company
S 80,000
Current assets
Investment in S Company
Plant and equipment (net)
360,000
-0-
560,000
224,000
Land
40,000
120,000
Total
$1.126,000
$424,000
$ 100,000
$ 28,000
Current liabilities
Long-term notes payable
Common stock
-0-
36,000
480,000
160,000
Other contributed capita
Retained earnings
244,000
64,000
302,000
136,000
$424,000
Total
$1.126,000
Transcribed Image Text:P Company purchased 80% of the outstanding common stock of S Company on January 2, 2011, for $360,000. And any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of S Company's other assets and liabilities are equal to their fair values. Balance sheets for P Company and S Company immediately after the stock acquisition were as follows: P Company $ 166,000 S Company S 80,000 Current assets Investment in S Company Plant and equipment (net) 360,000 -0- 560,000 224,000 Land 40,000 120,000 Total $1.126,000 $424,000 $ 100,000 $ 28,000 Current liabilities Long-term notes payable Common stock -0- 36,000 480,000 160,000 Other contributed capita Retained earnings 244,000 64,000 302,000 136,000 $424,000 Total $1.126,000
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