6 again Power Corporation acquired 100 percent ownership of Scrub Company on Feb

Question

6 again

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 $424,000 and $183,000, respectively, common stock outstanding of $91,000, and retained earnings of $150,000. 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 $6,000. Required: a. Prepare the following consolidation entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $266,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit

Explanation / Answer

a.

b.

Equity method Entries on Power Corp's Book Debit Credit Investment in Scrub Company $266,000       To Cash $266,000

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