Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scrub Company reported assets and liabilities with book values of $420,000 and $165,000, respectively, common stock outstanding of $80,000, and retained earnings of $175,000. The book values and fair values of Scrub's assets and liabilities were identical except for land, which had increased in value by $20,000, and inventories, which had decreased by $7,000. 1. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $251,000. ****please help with the red blanks **** Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $251,000. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No A B Event 1 2 Retained earnings Common stock Investment in Scrub Company Land Accounts Investment in Scrub Company Inventories Goodwill ✓ ✓ ✓ ✓ X Debit 175,000✔ 80,000✔ 20,000✔ 4,000 X Credit 255,000✔ 4,000 X 7,000 ✓
Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scrub Company reported assets and liabilities with book values of $420,000 and $165,000, respectively, common stock outstanding of $80,000, and retained earnings of $175,000. The book values and fair values of Scrub's assets and liabilities were identical except for land, which had increased in value by $20,000, and inventories, which had decreased by $7,000. 1. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $251,000. ****please help with the red blanks **** Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $251,000. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No A B Event 1 2 Retained earnings Common stock Investment in Scrub Company Land Accounts Investment in Scrub Company Inventories Goodwill ✓ ✓ ✓ ✓ X Debit 175,000✔ 80,000✔ 20,000✔ 4,000 X Credit 255,000✔ 4,000 X 7,000 ✓
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition,
Scrub Company reported assets and liabilities with book values of $420,000 and $165,000, respectively, common stock
outstanding of $80,000, and retained earnings of $175,000. The book values and fair values of Scrub's assets and liabilities
were identical except for land, which had increased in value by $20,000, and inventories, which had decreased by $7,000.
1. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the
business combination assuming Power acquired its ownership of Scrub for $251,000.
****please help with the red blanks ****
Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business
combination assuming Power acquired its ownership of Scrub for $251,000.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
No
A
B
Event
1
2
Retained earnings
Common stock
Investment in Scrub Company
Land
Accounts
Investment in Scrub Company
Inventories
Goodwill
✓
✓
✓
✓
X
Debit
175,000✔
80,000✔
20,000✔
4,000 X
Credit
255,000✔
4,000 X
7,000✓
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