Zoo Inc paid $268,000 to purchase 80% of the outstanding stock of Bird Corporati

Question

Zoo Inc paid $268,000 to purchase 80% of the outstanding stock of Bird Corporation, on December 31, 2005. The following year-end information was available just before the purchase: Zoo Bird Book Value Bird Book Value Fair Value Cash $ 378,000 $ 40,000 $ 40,000 Accounts Receivable 130,000 76,000 76,000 Inventory 240,000 50,000 55,000 Land 220,000 80,000 55,000 Plant and equipment-net 660,000 200,000 215,000 $ 1,628,000 $ 446,000 $ Accounts Payable $ 440,000 $ 11,000 $ 11,000 Bonds Payable 468,000 100,000 95,000 Capital stock, $10 par value 200,000 Capital stock, $15 par value 225,000 Additional paid-in capital 200,000 80,000 Retained earnings 320,000 30,000 $ 1,628,000 $ 446,000 Required: 1 Prepare Zoo’s consolidated balance sheet on December 31, 2005. Zoo Inc paid $268,000 to purchase 80% of the outstanding stock of Bird Corporation, on December 31, 2005. The following year-end information was available just before the purchase: Zoo Bird Book Value Bird Book Value Fair Value Cash $ 378,000 $ 40,000 $ 40,000 Accounts Receivable 130,000 76,000 76,000 Inventory 240,000 50,000 55,000 Land 220,000 80,000 55,000 Plant and equipment-net 660,000 200,000 215,000 $ 1,628,000 $ 446,000 $ Accounts Payable $ 440,000 $ 11,000 $ 11,000 Bonds Payable 468,000 100,000 95,000 Capital stock, $10 par value 200,000 Capital stock, $15 par value 225,000 Additional paid-in capital 200,000 80,000 Retained earnings 320,000 30,000 $ 1,628,000 $ 446,000 Required: 1 Prepare Zoo’s consolidated balance sheet on December 31, 2005.

Explanation / Answer

Concolidate balance sheet is shown as under:

Balance Sheet Zoo Bird Elimination Dr. Cr. Assets Cash 110,000 40,000 150,000 Accounts Receivable 130,000 76,000 206,000 Inventory 240,000 50,000 5,000 295,000 Land 220,000 80,000 25,000 275,000 Plant and equipment-net 660,000 200,000 15,000 875,000 Investment in Bird 268,000 268,000 1,628,000 446,000 1,801,000 Equities 0 Accounts Payable 440,000 11,000 451,000 Bonds Payable 468,000 100,000 5,000 563,000 Capital Stock 200,000 225,000 225,000 200,000 Additional Paid in capital 200,000 80,000 80,000 200,000 Retained Earnings 320,000 30,000 30,000 320,000 Minority Interest 67,000 67,000 Total Equities 1,628,000 446,000 360,000 360,000 1,801,000

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