4)Parrot Inc acquired a 100% interest in Sparrow Corporation on lanuary 2, 201 ,

Question

4)Parrot Inc acquired a 100% interest in Sparrow Corporation on lanuary 2, 201 , for SS000 annd when Sparrow had Common Stock of $15,000 and Retained Earnings of $25,000. Sparrow's as iabilities had book values equal to their fair values except for plant assets that were $2,000 with a remaining useful life of S years Balance sheets for Parrott and Sparrow on 2017, immediately after the business combination, are presented in the Grst two columsns consolidated balance sheet work papers Jauary 2, Entries Balance Sheet S 63,50o s4000 Cash Accounts 75.000 Plant assets- 170,000 35,000 Investment in 50,000 Goodwill Total Assets |$ 397,500 $ 58,000 EQUITIES Payables s120,000 18,000 Common Stock 100,000 Retained Earnings TOTAL 15,000 177,500 25,000 LIABILITIES 397,500 58,000 AND EQUITY Required omplete the consolidation balance sheet work paper for Parrot and subsidiary at January 2, 2017

Explanation / Answer

Parrot Sparrow Adjustments and eliminations Consolidated Balance Sheet Cash 63500 4000 67500 Receivables(Net) 75000 9000 84000 Inventories 39000 10000 2000 51000 Plant Assets Net 170000 35000 205000 Investment in Sparrow 42500 42500 GoodWill 8000 8000 Total Assets 390000 58000 415500 Payables 120000 18000 138000 Capital Stock 100000 15000 15000 100000 Retained Earnings 177500 25000 25000 170000 Non controlling Interest 7500 7500 Total Equity 787500 116000 50000 50000 415500 Goodwill = 50000-15000-25000-2000 8000

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