Pawn Company acquired 90 percent of the voting common shares of Shop Corporation

Question

Pawn Company acquired 90 percent of the voting common shares of Shop Corporation by issuing bonds with a par value and fair value of $121,500 to Shop's existing shareholders. Immediately prior to the acquisition, Pawn reported total assets of $510,000, liabilities of $320,000, and stockholders' equity of $190,000. At that date, Shop reported total assets of $350,000, liabilities of $215,000, and stockholders' equity of $135,000 Required: Immediately after Pawn acquired Shop's shares a. What amount of total assets did Pawn report in its individual balance sheet? Amount of total assets b. What amount of total assets was reported in the consolidated balance sheet? Amount of total assets

Explanation / Answer

Consolidated Balance Sheet Pawn Co. Shop Co.(90%) Consolidated Assets 510000 315000 825000 Total assets 510000 315000 825000 Liabilities 320000 193500 513500 Equity 190000 121500 311500 Total liabilities & Equity 510000 315000 825000 Pawn Company Total assets reported in a. Individual balance sheet 510000 b.Consolidated balance sheet 510000+(90%*350000)= 825000 c. Amount of total Liabilities in Consolidated Balance sheet 320000+(90%*215000)= 513500 d.Amount of Stockholders' equity in Consolidated Balance sheet (190000+(90%*135000))= OR (190000+121500)= 311500

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