Question
On January 1st, 2022, the Dumbledore and Voldomort Companies had the following Balance Sheets: Dumbledore Voldomort cash 20000 400000 equipment 40000 110000 accumulated dep.Equipment 10000
On January 1st, 2022, the Dumbledore and Voldomort Companies had the following Balance Sheets: Dumbledore Voldomort
cash 20000 400000
equipment 40000 110000
accumulated dep.Equipment 10000 20000
Building 100000 200000
accumulated dep. Building 10000 40000
land 90000 800000
accounts payable 30000 300000
inventory 50000 550000
accounts receivable 40000 500000
common stock $1 par 10000 100000
apic 90000 1000000
retained earnings 190000 1100000
total assets 320000 2500000
On January 2nd, Voldomort acquired 9000 shares (90%) of Dumbledore's stock by issuing 20,000 shares of its common stock to the owners of Dumbledore.
On January 2nd, Voldomort's stock was selling for $50 per share.
Additional information is as follows:
FAIR MARKET VALUE OF DUMBLEDORE'S ASSETS
Accounts receivable $ 40,000.00
inventory $ 50,000.00
equipment $ 70,000.00
land $ 70,000.00
in process R&D $ 30,000.00
Customer list $ 40,000.00
building $ 70,000.00
Both Dumbledore's and Voldomorts' buildings have a 10-year life straight line, no salvage
Both Dumbledore's and Voldomorts' equipment have a 5-year life straight line, no salvage.
REQUIRED:
1) Make the journal entry Voldomort makes when it acquires Dumbledore's stock
2) Make the journal entry Dumbledore makes when its stock is acquired by Voldomort
3) Make the necessary worksheet entries for the consolidation
4) Prepare a consolidated balance sheet on January 2nd 2022
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