On January 1, 2009, Pabst Company acquired 80% of Secor Company's common stock and 30% of Secor
Question:
On January 1, 2009, Pabst Company acquired 80% of Secor Company's common stock and 30% of Secor Company's 10% preferred stock. Pabst Company paid $680,000 for the common stock and $135,000 for the preferred stock. The preferred stock is cumulative and nonparticipating and has a call price of $104. On the date of acquisition, there were no dividends in arrears. On January 1, 2009, Secor Company reported the following account balances:
10% Preferred Stock ($100 par value) $ ............................................400,000
Common Stock ($10 par value) ......................................................500,000
Other Contributed Capital (Sale of common stock in excess of par value) ....100,000
Retained Earnings .....................................................................230,000
Total .................................................................................$1,230,000
Condensed pre-closing trial balances for the two companies at December 31, 2014 are presented below
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On December 31, 2014, dividends on the preferred stock were in arrears for 2013 and 2014.
Required:
Prepare a consolidated statements work paper for the year ended December 31, 2014. Assume that any difference between the implied value and book value of Secor is attributable to an undervaluation in the land of Secor Company in the case of common stock, and any difference between the implied value of preferred stock and the book value is assignable to other contributed capital or to the non controlling interest.
Step by Step Answer:
Dividends in arrears call premium 400000101 year 44000 shares 40000 16000 56000 1 To es...View the full answer
