Assume that a parent company acquires a 70% interest in a subsidiary for a purchase price of $1,078,000. The excess of total fair value of controlling and noncontrolling interests over book value is assigned to; a building (PPE net) that is worth $100,000 more than book value, an unrecorded patent valued at $200,000 and goodwill valued at $300,000. Goodwill is assigned proportionately to the controlling and noncontrolling interests
Submission Requirements:
Using the ACT470_Mod03-Option01.xlsx Excel spreadsheet in the Module 3 folder:
Prepare the consolidated balance sheet at the date of acquisition by placing the appropriate entries in their respective debit/credit column cells.
Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is an [E] or [A] entry.
Use Excel formulas to derive the Consolidated column amounts and totals.
Using the "Home" key in Excel, go to the "Styles" area and highlight the [E] and [A] entry cells in different shades.
Consolidation Entries
Parent Subsidia Dr Cr Consolidated
Cash 920,000 215,000 0
Accounts receivable 782,000 330,000 0
Inventory 1,100,000 425,000 0
Equity investment 1,078,000 0
Property, plant and equipment (PPE), net 5,400,000 800,000
Patent 0
Goodwill 0
Total assets 9,280,000 1,770,000 0
Current liabilities 810,000 330,000 0
Long-term liabilities 4,000,000 500,000
Common stock 920,000 90,000 0
Additional paid-in capital 700,000 120,000 0
Retained earnings 2,850,000 730,000 0
Noncontrolling interest 0
Total liabilities and equity 9,280,000 1,770,000 0