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On December 31, Year 1, P Company purchased 80% of the outstanding shares of S Company for $7,900 cash. The statements of financial position
On December 31, Year 1, P Company purchased 80% of the outstanding shares of S Company for $7,900 cash. The statements of financial position of the two companies immediately after the acquisition transaction appear below. S Company P Company Carrying Carrying Fair Amount Amount Value Plant and equipment (net) 9,600 $ 8,300 $ 7,000 Investment in S Company 7,900 Inventory 6,660 5,300 5,500 Accounts receivable 6,150 3,300 3,300 Cash 4,500 2,550 2,550 $ 34,810 $ 19,450 Ordinary shares 24 12,000 $ 4,500 Retained earnings 15,410 5,950 Long-term liabilities Other current liabilities 4,500 3,500 3,500 1,500 3,300 3,300 Accounts payable 1,400 2,200 2,200 $4 34,810 $ 19,450 Requlred: b) Prepare a consolidated statement of financial position at the date of acquisition under each of the following: i) Parent company extension theory ii) Entity theory.
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