Exercise 4-11 On January 1, 2017, Plutonium Corporation acquired 80% of the outs

Question

Exercise 4-11 On January 1, 2017, Plutonium Corporation acquired 80% of the outstanding stock of Sulfurst Inc. for S27 7,500 cash. The following balance sheet shows Sulfurst Inc.'s book values immediately prior to acquisition as well as the appraised values of its assets and liabilities by Plutonium's experts. Book Values Market Va Current assets $94,800 $94,800 Property, plant & equipment: 93,400 185,900 72,500 185,900 $353,200 $92,000 91,600 18,100 151,500 $353,200 Land Building & machinery (net) Total assets Total liabilities Common stock, $5 par value Additional paid-in-capital Retained earnings Total liabilities and equities $92,000

Explanation / Answer

Ans. Account Titles & Explanations Debit Credit Investment in Subsidiary 277500 To cash 277500 *The entry is made by the acquisition amount which has been paid by Plutonium corporation.

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