Question
Orange Company acquired 100 percent of Shell Company's voting common stock on January 1, 2019, for $350,000. At that date, the book value and fair
Orange Company acquired 100 percent of Shell Company's voting common stock on January 1, 2019, for $350,000. At that date, the book value and fair values of Shell's assets and liabilities were equal. Shell reported the following summarized balance sheet data:
Shell reported net income of $55,000 for 2019 and paid dividend of $20,000
Required:
a. Give the journal entries recorded by Orange Company during 2019 on its book if Shell accounts for its investment in Shell using equity method.
b. Prepare the book value calculation table
c. Give the consolidation entries needed at December 31, 2019, to prepare consolidated financial statements.
Assets Total $750,000 $750,000 Accounts payable Notes payable Common stock Retained earnings Total $ 100,000 300,000 180,000 170,000 $750,000
Step by Step Solution
3.49 Rating (152 Votes )
There are 3 Steps involved in it
Step: 1
Journal entries in the book of Orange company on aquisition is as follows Date Particulars Debit Cre...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started