On January 1, 2019, Portugal Corporation bought 90% of the stock of Sweden Corporation for $500,000 (with cash). The NCI at date of acquisition was valued at $55,555.56. The Balance Sheets of the two companies immediately after Portugal acquired (January 1, 2019) Sweden Corporation showed the following amounts: Portugal Sweden Cash Accounts Receivable Inventory Land Buildings & Equipment - Net Copyrights Investment in Sweden Total Assets $ 90,000 $ 110,000 160,000 40,000 500,000 290,000 1.100.000 140,000 1,000,000 420,000 100,000 0 500.000 0 $3,450,000 $1,000,000 Accounts Payable Bonds Payable Common Stock Additional Paid in Capital Retained Earnings Total Liabilities and Stockholders' Equity $ 410,000 1,040,000 1,000,000 200,000 800,000 200,000 300,000 300,000 50,000 150.000 $3,450,000 $1,000,000 At the date of acquisition, Portugal owed Sweden $40,000. Also, on the date of acquisition the Book Value of the net assets of Sweden equaled its Fair Value. Any difference between the purchase price plus the value of the NCI and the Fair Value of the net assets is attributed to Goodwill. Portugal uses the equity method for its investment in Sweden. Required: 1. List all journal entries that Portugal made to record its investment in Sweden on the date of acquisition 2. List all Elimination Entries that would need to be made in order to prepare a workpaper for the consolidated Balance Sheet of Portugal and Sweden immediately after the combination (January 1, 2019). 3. Prepare a workpaper for the consolidated Balance Sheet of Portugal and Sweden immediately after the combination (January 1, 2019). Show all necessary elimination entries in their proper columns. Use a letter coding system for each elimination entry. Use Figure 5-2 for general format, and syllabus for additional formal requirements. CHECK FIGURE: Consolidated Assets = $3,965,555.56 On January 1, 2019, Portugal Corporation bought 90% of the stock of Sweden Corporation for $500,000 (with cash). The NCI at date of acquisition was valued at $55,555.56. The Balance Sheets of the two companies immediately after Portugal acquired (January 1, 2019) Sweden Corporation showed the following amounts: Portugal Sweden Cash Accounts Receivable Inventory Land Buildings & Equipment - Net Copyrights Investment in Sweden Total Assets $ 90,000 $ 110,000 160,000 40,000 500,000 290,000 1.100.000 140,000 1,000,000 420,000 100,000 0 500.000 0 $3,450,000 $1,000,000 Accounts Payable Bonds Payable Common Stock Additional Paid in Capital Retained Earnings Total Liabilities and Stockholders' Equity $ 410,000 1,040,000 1,000,000 200,000 800,000 200,000 300,000 300,000 50,000 150.000 $3,450,000 $1,000,000 At the date of acquisition, Portugal owed Sweden $40,000. Also, on the date of acquisition the Book Value of the net assets of Sweden equaled its Fair Value. Any difference between the purchase price plus the value of the NCI and the Fair Value of the net assets is attributed to Goodwill. Portugal uses the equity method for its investment in Sweden. Required: 1. List all journal entries that Portugal made to record its investment in Sweden on the date of acquisition 2. List all Elimination Entries that would need to be made in order to prepare a workpaper for the consolidated Balance Sheet of Portugal and Sweden immediately after the combination (January 1, 2019). 3. Prepare a workpaper for the consolidated Balance Sheet of Portugal and Sweden immediately after the combination (January 1, 2019). Show all necessary elimination entries in their proper columns. Use a letter coding system for each elimination entry. Use Figure 5-2 for general format, and syllabus for additional formal requirements. CHECK FIGURE: Consolidated Assets = $3,965,555.56
