1. On January 1, 2020, a parent company acquired 90% of a subsidiarys outstanding common stock in exchange for 10,000 shares of the parents common stock ($10 par value). The parents common stock has a $13.50 per share fair value at the date of the transaction. Assume that immediately preceding the acquisition by the parent, the subsidiary had 4,500 shares of common stock outstanding and it was trading at $33 per share. On January 1, 2020, the parent contracts with the selling subsidiary stockholders to issue 1,000 additional shares of the parents common stock on April 10, 2021 if fiscal year-end December 31, 2020 consolidated income is greater than $1 million. At the acquisition date, the fair value of this contingent-payment provision is $9,000. Assume that fiscal year-end December 31, 2020 consolidated net income is $1.5 million and that on April 10, 2021 the market value of the parents common stock is $18 per share. What journal entries are required in the parents pre-consolidation accounting records at January 1, 2020; December 31, 2020 and April 10, 2021?

2. On January 1, 2020, a parent company acquired 90% of a subsidiarys outstanding common stock in exchange for 10,000 shares of the parents common stock ($10 par value). The parents common stock has a $13.50 per share fair value at the date of the transaction. Assume that immediately preceding the acquisition by the parent, the subsidiary had 4,500 shares of common stock outstanding and it was trading at $33 per share. On January 1, 2020, the parent contracts with the selling subsidiary stockholders to pay $15,000 cash on April 10, 2021 if fiscal year-end December 31, 2020 consolidated income is greater than $1 million. At the acquisition date, the fair value of this contingent-payment provision is $9,000. Assume that fiscal year-end December 31, 2020 consolidated net income is $1.5 million and that on April 10, 2021 the market value of the parents common stock is $18 per share. What journal entries are required in the parents pre-consolidation accounting records at January 1, 2020; December 31, 2020 and April 10, 2021?

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