Exercise 5-6 (Static) Majority-Owned Subsidiary Acquired at Higher than Book Value LO 5-2 Professor Corporation acquired 70 percent of Scholar Corporation's common stock on December 31, 20X4, for $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. 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 Scholar Corporation Total Assets Accounts Payable Mortgage Payable Common Sto Retained Earnings Total Liabilities & Stockholders' Equity view transaction list Consolidation Worksheet Entries A Professor Corporation $50,300 C 90,000 130,000 60,000 410,000 (150,000) 102,200 $692,500 D $152,500 250,000 0,000 210,000 $ 692,500 At the date of the business combination, the book values of Scholar's assets and liabilities approximated fair value except for Inventory, which had a fair value of $81,000, and buildings and equipment, which had a fair value of $185,000. At December 31, 20X4, Professor reported accounts payable of $12,500 to Scholar, which reported an equal amount in its accounts receivable. Scholar Corporation $ 21,000 44,000 75,000 Required: a. Record 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. 30,000 250,000 (80,000) $340,000 $ 35,000 180,000 85,000 $340,000
Exercise 5-6 (Static) Majority-Owned Subsidiary Acquired at Higher than Book Value LO 5-2 Professor Corporation acquired 70 percent of Scholar Corporation's common stock on December 31, 20X4, for $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. 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 Scholar Corporation Total Assets Accounts Payable Mortgage Payable Common Sto Retained Earnings Total Liabilities & Stockholders' Equity view transaction list Consolidation Worksheet Entries A Professor Corporation $50,300 C 90,000 130,000 60,000 410,000 (150,000) 102,200 $692,500 D $152,500 250,000 0,000 210,000 $ 692,500 At the date of the business combination, the book values of Scholar's assets and liabilities approximated fair value except for Inventory, which had a fair value of $81,000, and buildings and equipment, which had a fair value of $185,000. At December 31, 20X4, Professor reported accounts payable of $12,500 to Scholar, which reported an equal amount in its accounts receivable. Scholar Corporation $ 21,000 44,000 75,000 Required: a. Record 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. 30,000 250,000 (80,000) $340,000 $ 35,000 180,000 85,000 $340,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give image format
Transcribed Image Text:Note: If no entry is required for a transaction/event, select "No journal entry requi
view transaction list
Record the basic consolidation entry.
B Record the excess value (differential) reclassification
entry.
C Record the entry to eliminate the intercompany accounts.
D Record the optional accumulated depreciation
consolidation entry.
Note:
= journal entry has been entered
Record entry
Clear entry
X
Credit
view consolidation
b. Prepare a consolidated balance sheet worksheet.
Note: Values in the first two columns (the "parent" and "subsidiary" balances) tha
a minus sign, while all values in the "Consolidation Entries" columns should be es
multiple adjusting entries are required, combine all debit entries into one amount
the worksheet. Similarly, combine all credit entries into one amount and enter thi
Transcribed Image Text:Exercise 5-6 (Static) Majority-Owned Subsidiary Acquired at Higher than Book Value LO 5-2
Professor Corporation acquired 70 percent of Scholar Corporation's common stock on December 31, 20X4, for $102,200. The fair
value of the noncontrolling interest at that date was determined to be $43,800. 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 Scholar Corporation
Total Assets
Accounts Payable
Mortgage Payable
Common Stock
Retained Earnings
Total Liabilities & Stockholders' Equity
view transaction list
Consolidation
Worksheet Entries
B C
Professor
Corporation
$50,300
A
90,000
130,000
60,000
410,000
(150,000)
102,200
$692,500
D
$ 132,500
250,000
80,000
210,000
$692,500
At the date of the business combination, the book values of Scholar's assets and liabilities approximated fair value except for
inventory, which had a fair value of $81,000, and buildings and equipment, which had a fair value of $185,000. At December 31, 20X4.
Professor reported accounts payable of $12,500 to Scholar, which reported an equal amount in its accounts receivable.
Scholar
Corporation
$ 21,000
44,000
75,000
30,000
250,000
(80,000)
Required:
a. Record 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.
$340,000
$ 35,000
180,000
40,000
85,000
340,000
>
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