(a) Account Titles and Explanation Debit Credit Pool Company purchased 90% of th

Question

(a)

Account Titles and Explanation

Debit

Credit

Pool Company purchased 90% of the outstanding common stock of Spruce Company on December 31, 2014, for cash. At that time the balance sheet of Spruce Company was as follows:
Current assets $1,114,600 Plant and equipment 941,380 Land 177,130    Total assets $2,233,110 Liabilities $827,740 Common stock, $20 par value 867,000 Other contributed capital 468,300 Retained earnings 174,370    Total 2,337,410 Less treasury stock at cost, 5,215 shares 104,300    Total equities $2,233,110

Explanation / Answer

Note 1 : Value of Land : ($1,537,800 / 90 %) - ($867,000 + $468,300 + $174,370 - $104,300)

=$1,708,667 - $1,405,370 = $303,297

Account Titles and Explanation Debit ($) Credit ($) Common stock 867,000 Other contributed capital 468,300 Retained earnings 174,370 Land (Note 1) 303,297 Treasury stock 104,300 Investment in Spruce Company 1,537,800 Non - Controlling Interest [($1,537,800 / 90 %) * 10 %] 170,867

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