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On January 1 , 2 0 2 4 , Palmer Company acquired a 9 0 % interest in Stevens Company at a cost of $
On January Palmer Company acquired a interest in Stevens Company at a cost of $ At the purchase date, Stevens Company's stockholders' equity consisted of the following: Common stock $ Retained earnings An examination of Stevens Company's assets and liabilities revealed the following at the date of acquisition: Book Value Fair Value Cash $ $ Accounts receivable Inventories Equipment Accumulated depreciationequipment Land Bonds payable Other Total $ $ Additional InformationDate of Acquisition Stevens Company's equipment had an original life of years and a remaining useful life of years. All the inventory was sold in Stevens Company purchased its bonds payable on the open market on January for $ and recognized a gain of $ Palmer Company uses the partial equity method to record its investment in Stevens Company. Financial statement data for are presented here: Palmer Company Stevens Company Sales $ $ Cost of sales Gross margin Depreciation expense Other expenses Income from operations Equity in subsidiary income Net income $ $ Retained earnings $ $ Net income Dividends Retained earnings $ $ Palmer Company Stevens Company Cash $ $ Accounts receivable Inventories Investment in Stevens Company Equipment Accumulated depreciationequipment Land Total assets $ $ Accounts payable $ $ Bonds payable Common stock Retained earnings Total liabilities and equity $ $ Required: Prepare in general journal form the workpaper entry to allocate and depreciate the difference between book value and the value implied by the purchase price in the December consolidated statements workpaper. Prepare a consolidated financial statements workpaper for the year ended December Prepare in good form a schedule or taccount showing the calculation of the controlling interest in consolidated net income for the year ended December If you completed Problem a comparison of the consolidated balances in this problem with those you obtained in Problem will demonstrate that the method cost or partial equity used by the parent company to record its investment in a consolidated subsidiary has no effect on the consolidated balances.
On January Palmer Company acquired a interest in Stevens Company at a cost of $ At the purchase date, Stevens Company's stockholders' equity consisted of the following:
Common stock $
Retained earnings
An examination of Stevens Company's assets and liabilities revealed the following at the date of acquisition:
Book Value
Fair Value
Cash
$
$
Accounts receivable
Inventories
Equipment
Accumulated depreciationequipment
Land
Bonds payable
Other
Total
$
$
Additional InformationDate of Acquisition
Stevens Company's equipment had an original life of years and a remaining useful life of years. All the inventory was sold in Stevens Company purchased its bonds payable on the open market on January for $ and recognized a gain of $ Palmer Company uses the partial equity method to record its investment in Stevens Company. Financial statement data for are presented here:
Palmer Company
Stevens Company
Sales $ $
Cost of sales
Gross margin
Depreciation expense
Other expenses
Income from operations
Equity in subsidiary income
Net income $ $
Retained earnings $ $
Net income
Dividends
Retained earnings $ $
Palmer Company
Stevens Company
Cash $ $
Accounts receivable
Inventories
Investment in Stevens Company
Equipment
Accumulated depreciationequipment
Land
Total assets $ $
Accounts payable $ $
Bonds payable
Common stock
Retained earnings
Total liabilities and equity $ $
Required:
Prepare in general journal form the workpaper entry to allocate and depreciate the difference between book value and the value implied by the purchase price in the December consolidated statements workpaper.
Prepare a consolidated financial statements workpaper for the year ended December
Prepare in good form a schedule or taccount showing the calculation of the controlling interest in consolidated net income for the year ended December
If you completed Problem a comparison of the consolidated balances in this problem with those you obtained in Problem will demonstrate that the method cost or partial equity used by the parent company to record its investment in a consolidated subsidiary has no effect on the consolidated balances.
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