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On January 1 2017 the balance sheets of Potter Co. and Hogwarts Co. were as follows: Potter Hogwarts cash 1,000,000 50,000 equipment 1,000,000 100,000 a/d
On January 1 2017 the balance sheets of Potter Co. and Hogwarts Co. were as follows:
Potter | Hogwarts | ||||||||||||
cash | 1,000,000 | 50,000 | |||||||||||
equipment | 1,000,000 | 100,000 | |||||||||||
a/d equip | 100,000 | 10,000 | |||||||||||
Land | 2,000,000 | 20,000 | |||||||||||
building | 3,000,000 | 100,000 | |||||||||||
a/d building | 1,000,000 | 30,000 | |||||||||||
patent | 50,000 | 50,000 | |||||||||||
total assets | 5,950,000 | 280,000 | |||||||||||
accounts payable | 1,000,000 | 40,000 | |||||||||||
notes payable | 1,000,000 | 40,000 | |||||||||||
common stock $5 par | 3,000,000 | 150,000 | |||||||||||
apic c/s | 100,000 | 0 | |||||||||||
r/e | 850,000 | 50,000 | |||||||||||
On January 2nd Potter acquired 80% of the stock of Hogwarts by issuing 50,000 shares of common stock when the stock was | |||||||||||||
selling for $11 per share. At that time the fair market value of Hogwarts assets were: | |||||||||||||
equipment | 60,000 | ||||||||||||
Land | 30,000 | ||||||||||||
building | 110,000 | ||||||||||||
patent | 40,000 | ||||||||||||
REQUIRED: | |||||||||||||
A) MAKE THE JOURNAL ENTRY POTTER MAKES WHEN IT ISSUES THE STOCK TO ACQUIRE HOGWARTS | |||||||||||||
B) MAKE THE JOURNAL ENTRY HOGWARTS MAKES WHEN POTTER ISSUES THE STOCK TO ACQUIRE HOGWARTS | |||||||||||||
C) MAKE ANY NECESSARY WORKSHEET ENTRIES | |||||||||||||
D) PREPARE A CONSOLIDATED BALANCE SHEET ON 1/2/2017 | |||||||||||||
BONUS 2 PTS NO PARTIAL CREDIT: WHAT WOULD BE THE AMOUNT OF GOODWILL IF POTTER WAS DOING ITS BOOKS UNDER IFRS? | |||||||||||||
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