nevermind I figured it out

P5-29 Majority-Owned Subsidiary Acquired at More Than Book Value LO 5-2 Phone Corporation acquired 70 percent of Smart Corporation's common stock on December 31, 20X4, for $102,200. At that date, the fair value of the noncontrolling interest was $43.500. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: T 1 Item Phone Smart Corporation Corporation Cash $ 50,300 $ 21,000 Accounts Receivable 90,000 44,000 Inventory 130,000 75,000 Land 60,000 30,000 Buildings & Equipment 410.000 250,000 Less: Accumulated Depreciation (150,000) (80.000) Investment in Smart Corporation 102.200 2 Total Assets $692,500 $340,000 3 Accounts Payable $152.500 $ 35,000 24 Mortgage Payable 250.000 180,000 26 Common Stock 80,000 40,000 27 Retained Earnings 210,000 85,000 28 Total Liabilities & Stockholders' Equity S692,500 29 $340,000 30 At the date of the business combination, the book values of Smart's assets and liabilities approximated fair value except for 31 32 inventory, which had a fair value of $81,000, and buildings and equipment, which had a fair value of $185,000. At December 31. 33 20X4, Phone reported accounts payable of $12,500 to Smart, which reported an equal amount in its accounts receivable. 34 Problem Facts P5-29 Ready Initial Entry: Investment in Smart Corporation Cash 102,200 102,200 Investment in Smart Corp - 70% Investment in Smart Corp - 30% Book Value of Smart Corp Differential 71,540 30,660 87,500 14,700 @70% @30% Fair Value Differences Inventory - FV of Buildings & Equipment Identifiable FV Increases 3 Goodwill 14,700 @70% 10,290 @30% 4,410 0 1 Book Value Calculations: 2 3 + Phone Corp. 70% 87,500 NCI = 30% 37,500 Common Stock 40,000 Retained Earnings 85,000 Book value at acquisition TOTAL Total Equity 125,000 Excess Value (Differential) Calculations: Assets and Liability adjustments 15 26 27 28 29 30 31 32 Phone Corp. 70% 14,700 NCI -30% 6,300 Beginning balances Inventory 6,000 Building 15,000 Total 21,000 32 Investment in Smart Corp. 102,200 87,500 14,700 Basic Excess. Reclass 40,000 85,000 87,500 37,500 33 84 35 Acquisition Price 36 37 38 39 Basic Consolidation Entry: 40 Common Stock 41 Retained Earnings 42 Investment in Smart Corp. 43 NCI in NA of Smart Corp. 44 45 Excess Value Reclass Entry: 46 Inventory 47 Buildings & Equipment 48 Investment in Smart Corp. 49 NCI in NA of Smart Corp. 50 51 Intercompany Transaction Entry: 52 Accounts Payable 53 Accounts Receivable 54 55 Accumulated Depreciation Reclass Entry: 56 Accumulated Depreciation 57 Building & Equipment 58 6,000 15,000 14,700 6,300 12,500 12,500 80,000 80,000 DO 59 Consolidation Entries DR CR Phone Corp. Smart Corp. Consolidated Balance Sheet Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Smart Corp. 50,300 90,000 130,000 60,000 410,000 (150,000) 102,200 21,000 44,000 75,000 30,000 250,000 (80,000) 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 Total Assets 692,500 340,000 Accounts Payable Mortgage Payable Common Stock Retained Earnings NCI in NA of Smart Corp. 152,500 250,000 80,000 210,000 35,000 180,000 40,000 85,000 Total Liabilities & Equity 692,500 340,000 80 1 0 Phone Corporation and Subsidiary 2 Consolidated Balance Sheet 3 December 31, 20X4 4 5 Cash Accounts Receivable -7 Inventory 8 Land 9 Buildings & Equipment 0 Less: Accumulated Depreciation 21 Total Assets 22 93 Accounts Payable 34 Mortgage Payable 95 Common Stock 26 Retained Earnings 37 Noncontrolling Interest 38 Total Liabilities and Equity 00 Problem Facts p5_29