12th Edition

ISBN: 9781259916977

Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy

Publisher: Mcgraw-hill Education,

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The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The sto…

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Textbook Question

Chapter 3, Problem 3.5E

Balance Sheet Consolidation
On January 1, 20X3, Parade Corporation reported total assets of $470,000, liabilities of $270,000,and stockholders’ equity of $200,000. At that date, Summer Corporation reported total assets of $190,000, liabilities of $135,000, and stockholders’ equity of $55,000. Following lengthy negotiations, Parade paid Summer’s existing shareholders $44,000 in cash for 80 percent of the voting common shares of Summer.
Required
Immediately alter Parade purchased the Summer shares,
a. What amount of total assets did Parade report in its individual balance sheet?
b. What amount of total assets was reported in the consolidated balance sheet?
C. What amount of total liabilities was reported in the consolidated balance sheet?
d. What amount of stockholders’ equity was reported in the consolidated balance sheet?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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Chapter 3, Problem 3.4.4E

Chapter 3, Problem 3.6E

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Chapter 3 Solutions

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Solution Summary: The author explains how the consolidated financial statement includes all the assets and liabilities of the parent and subsidiary company over a particular period.

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