On December 31, 20X8, Banner Corporation acquired 80 percent of Dwyer Company’s
ID: 2474923 • Letter: O
Question
On December 31, 20X8, Banner Corporation acquired 80 percent of Dwyer Company’s common stock for $136,000. At the acquisition date, the book values and fair values of all of Dwyer’s assets and liabilities were equal. Banner uses the equity method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately following the acquisition is as follows:
Prepare a consolidated balance sheet for Banner at December 31, 20X8.
On December 31, 20X8, Banner Corporation acquired 80 percent of Dwyer Company’s common stock for $136,000. At the acquisition date, the book values and fair values of all of Dwyer’s assets and liabilities were equal. Banner uses the equity method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately following the acquisition is as follows:
Explanation / Answer
Book Value Calculations: NCI - 20% + Banner Corp. - 80% = Common Stock + Retained Earnings Book value at acquisition 34,000 136,000 90,000 80,000 Banner Corp. Dwyer Co. Elimination Entries DR CR Consolidated Balance Sheet Cash 74,000 20,000 94,000 Accounts Receivable 120,000 70,000 190,000 Inventory 180,000 90,000 270,000 Fixed Assets (net) 350,000 240,000 590,000 Investment in Dwyer Co. 136,000 136,000 0 Total Assets 860,000 420,000 136,000 1,144,000 Accounts Payable 65,000 30,000 95,000 Notes Payable 350,000 220,000 570,000 Common Stock 150,000 90,000 90,000 150,000 Retained Earnings 295,000 80,000 80,000 295,000 NCI in NA of Dwyer Co. 34,000 34,000 Total Liabilities & Equity 860,000 420,000 170,000 34,000 1,144,000 Banner Corporation and Subsidiary Consolidated Balance Sheet December 31, 20X8 Cash 94,000 Accounts Receivable 190,000 Inventory 270,000 Fixed Assets 590,000 Total Assets 1,144,000 Accounts Payable 95,000 Notes Payable 570,000 Common Stock 150,000 Retained Earnings 295,000 NCI in NA of Smudge Eraser 34,000 Total Liabilities and Equity 1,144,000
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