E 11-4 Computations (parent-company and entity theories)

Balance sheet information of Pop and Son Corporations at December 31, 2015, is summarized as follows (in thousands):

Pop Book Value Son Book Value Son Fair Value Current assets $ 520 $ 50 $ 90 Plant assets—net 480 250 360

$1,000 $300 $450 Current liabilities $ 80 $ 40 $ 50 Capital stock 800 200 Retained earnings 120 60

$1,000 $300 On January 2, 2016, Pop purchases 80 percent of Son’s outstanding shares for $500,000 cash.

REQuIRED 1. Determine goodwill from the acquisition under

(a) parent-company theory and

(b) entity theory.

2. Determine noncontrolling interest at January 2, 2016, under

(a) parent-company theory and

(b) entity theory.

3. Determine the amount of total assets that would appear on a consolidated balance sheet prepared at January 2, 2016, under

(a) parent-company theory and

(b) entity theory.

Consolidation Theories, Push-Down Accounting, and Corporate Joint Ventures 411