Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi, I need help figuring out what i did wrong. Assume that Parent Company decides to acquire Sub Company for $564,000 of debentures Sub Company

Hi,

I need help figuring out what i did wrong.

Assume that Parent Company decides to acquire Sub Company for $564,000 of debentures

Sub Company Balance Sheet Assets, Liabilities & Equities

Book Value Fair Value

Cash $40,000 $40,000 AR $15,000 $10,000

Inventory $105,000 $200,000

Land $60,000 $100,000

Plant and Equipment $400,000 $300,000

Less: Accumulated Depreciation -$150,000

Goodwill $10,000

Patent $0 $0

Total Assets $480,000 $650,000

AP $50,000 $50,000

Common Stock $100,000

Additional Paid In Capital $60,000

Retained Earnings $270,000

Total Liabilities & Equity $480,000

***

This was my answer:

Prepare the consolidating journal entries for a 100%Asset Acquisition

Account Amount DR CR

Investment in Parent Company $564,000 $564,000

Current Liabilities $50,000 $50,000

Accumulated Depreciation $150,000 $150,000

Cash and Receivables $55,000 $55,000

Inventory $105,000 $105,000

Land $60,000 $60,000

Plant and Equipment $400,000 $400,000

Goodwill $10,000 $10,000

Gain on Sale of Net Assets $134,000 $134,000

Common Stock $100,000 $100,000

Additional Paid-In Capital $60,000 $60,000

Retained Earnings $270,000 $270,000

Gain on Sale of Net Assets $134,000 $134,000

Investment in Parent Company $564,000 $564,000

***

Any explanation of where I went wrong would be greatly appreciated.

Thank you, Lindy

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, G. Richard Chesley, Ray Carroll

6th Canadian Edition

0070915164, 9780070915169

More Books

Students also viewed these Accounting questions

Question

How is social media changing crisis prevention efforts?

Answered: 1 week ago

Question

Write a Python program to check an input number is prime or not.

Answered: 1 week ago