Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Bon Air, Inc., acquired 70 percent (2,800 shares) of the outstanding voting stock of Creedmoor Corporation on January 1, 2006, for $250,000 cash. Creedmoor's net
Bon Air, Inc., acquired 70 percent (2,800 shares) of the outstanding voting stock of Creedmoor Corporation on January 1, 2006, for $250,000 cash. Creedmoor's net assets on that date totaled $230,000, but this balance included three accounts having fair values that differed from their book values: Net Income Dividends Paid 2006 $180,000 $100,000 2007 200,000 100,000 2008 300,000 100,000 2009 400,000 120,000 The following trial balances are for these two companies as of December 31, 2009. Morning owes Good $100,000 as of this date. Good Morning Cash $ 300,000 $ 200,000 Receivables 700,000 400,000 Inventory 400,000 500,000 Investment in Morning 1,400,000 ?0? Land 700,000 600,000 Buildings (net) 300,000 700,000 Operating expenses 400,000 100,000 Dividends paid 380,000 120,000 Total debits $4,580,000 $2,620,000 Liabilities $ 200,000 $ 620,000 Common stock 1,000,000 460,000 Additional paid-in capital 600,000 40,000 Retained earnings, 1/1/09 1,800,000 1,000,000 Revenues 884,000 500,000 Dividend income 96,000 ?0? Total credits $4,580,000 $2,620,000 Using the purchase method, prepare consolidated financial statements for this business combination for 2009
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started