Sewell purchased 80% of the voting stock of Snicker for $425,000. At the date of
ID: 2422435 • Letter: S
Question
Sewell purchased 80% of the voting stock of Snicker for $425,000. At the date of acquisition, Snicker's equity accounts were as follows: Common Stock - $615,000; Other Contributed Capital - $120,000 and Retained Earnings - $25,000.At the date of acquisition, all fair values of Snicker's net assets equal their book value except for Land.Snicker's fair value of Land is $25,000 greater than the book value.Prepare in general journal form the workpaper entries to eliminate Powell's investment in Snicker Company in the preparation of a consolidated workpaper at the date of acquisition.A computation and allocation is not required, but would be helpful to complete in order to prepare the eliminating entries correctly.
Explanation / Answer
calculation good will/ capital profit on the date of acquisition:
controling interest
80%
non controling interest
20%
Eliminating entry
capital profit $203,000
Investment in subcidery $425,000
non controling interest $157,000
Particulars Totalcontroling interest
80%
non controling interest
20%
Common stock $615,000 $492,000 $123,000 Other contributed capital $120,000 $96,000 $24,000 Reatined earnings $25,000 $20,000 $5,000 Adjustment in fair value $25,000 $20,000 $5,000 Total networth $785,000 $628,000 $157,000 Less:amount of investment $425,000 $203,000Related Questions
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