The following are the balance sheets for Plate and Salad immediately prior to Plate’s September 1, 2008 acquisition of Salad:

Consider the following cases:
Case 1 Plate buys 100% of Salad’s common stock for \($180,000\) cash. The fair value of Salad’s assets and liabilities equal their book value.
Case 2 Plate buys 100% of Salad’s common stock for \($210,000\) cash. The fair value of Salad’s land is \($20,000\) and of its buildings and equipment is \($110,000\). All other fair values equal book values.
Required:
1. Prepare the September 1, 2008 journal entry on Plate’s books to record the acquisition of Salad.
2. Prepare the elimination entries needed to prepare a consolidated balance sheet immediately after the acquisition.
3. Prepare the consolidated balance sheet immediately after the acquisition.

Transcribed Image Text:

Plate Salad Assets Cash $500,000 $100,000 Accounts receivable 50,000 20,000 Inventory 100,000 30,000 Land 50,000 10,000 Bldg. & equip.net 200,000 100,000 Total $900,000 $260,000 Liabilities & equity Accounts payable $ 40,000 $ 80,000 Bonds payable 200,000 Common stock & PIC 300,000 -0- 100,000 Retained earnings 360,000 80,000 Total $900,000 $260,000