Chapter 12, Problem 12.7BP

(a)

To determine

Stock Investments

Stock investments refer to the investment in a financial instrument known as stock that, gives the right of ownership to an investor equal to the amount invested in the company. Thus, it enables a stockholder to claim in the profits and the assets of the company.

Consolidated worksheet

The preparation of consolidated balance sheet is helped by using a consolidated worksheet. This contains columns for data of balance sheet for separate legal entities, intercompany eliminations, and consolidated data.

Consolidated Balance sheet:

Consolidated balance sheet refer to the balance sheet prepared with the data of both parent company and subsidiary company. So, consolidated balance sheet is prepared when a company (parent company) holds more than 50% of stock of another company (subsidiary company).

To Prepare: The entry for Company P’s acquisition of Company S’s stock.

(b)

To determine

To Prepare: A consolidated worksheet at December 31, 2015.

(c)

To determine

To Prepare: A consolidated balance sheet at December 31, 2015.