On October 1, 2014, Pacer Corp. acquired all of Sunny Corp.s outstanding stock for cash. The fair

Question:

On October 1, 2014, Pacer Corp. acquired all of Sunny Corp.’s outstanding stock for cash. The fair value of Sunny’s net assets was less than the purchase price but more than the net carrying amount. During October 2014, Pacer sold goods to Sunny at a profit. At December 31, 2014, 40% of these goods remained in Sunny’s inventory.

Required:
1. Specify reasons for preparing consolidated that present operating results, cash flows, and financial position as if a parent company and its subsidiaries were a single entity.
2. How will the acquisition affect Pacer’s consolidated at October 1, 2014?
3. What eliminations are required for the intra-entity sales when preparing consolidated at December 31, 2014?
4. What is the effect on Pacer’s separate immediately after the October 1, 2014, acquisition?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...