Acquisitions achieved in stages (step acquisitions) 

Assume that a parent company gains control over its subsidiary with the purchase of a 45% interest for $180,000. Prior to this transaction, the parent's Equity Investment account reports a balance of $112,000 on the acquisition date and represents a 35% interest in the subsidiary. The fair value of 100% of the subsidiary on the date the parent obtains control of the subsidiary is $400,000 (assume no premium for control). Prepare the journal entries to record the acquisition

Journal Entries

Equity Investment 180,000

?Cash           180,000

(to Record Purchase) 

Equity Investment ?

?Gain on revaluation of subsidiary ?

(To record write-up.)