Consolidation entries at date of acquisition (purchase price greater than book value) A parent company exchanges 30,000 shares of its $1 par value common stock, with a market value of $10/share, for all of the shares owned by the subsidiary's shareholders, resulting in a $300,000 total purchase price. On the acquisition date, the subsidiary reported a book value of Stockholders' Equity of $225,000, comprised of $90,000 of Common Stock and $135,000 of Retained Earnings. An examination of the subsidiary's balance sheet revealed that book values were equal to fair values for all assets except for PPE (net), which has a book value of $120,000 and a fair value of $195,000. a. Prepare the entry that the parent makes to record the investment. General Journal Description Equity investment Common stock Additional paid-in capital 270,000 Credit Debit 300,000 0 30,000 0 0 b. Prepare the [E] and [A] consolidation entries. Credit Debit 90,000 135,000 0 0 Consolidation Worksheet Description [E] Common stock Retained earnings Equity investment to eliminate the stockholders' equity of subsidiary on the acquisition date [A] PPE (net) Equity investment to record the [A] assets purchased on the acquisition date 0 225,000 75,000 0 0 75,000 Previous A Save Answers Next >