P$4-37$A Push$-$Down Accounting

On December $31,20$X$6,$ Print Corporation and Size Company entered into a business

combination in which Print acquired all of Size's common stock for $$935,000.$ At the date

of combination, Size had common stock outstanding with a par value of $$100,000,$

additional paid$-$in capital of $$400,000,$ and retained earnings of $$175,000.$ The fair values

and book values of all Size's assets and liabilities were equal at the date of combination,

except for the following:

$"$ A $"$ indicates that the item relates to Appendix $4$A$.$

The buildings had a remaining life of $20$ years, and the equipment was expected to last another

$10$ years. In accounting for the business combination, Print decided to use push$-$down

accounting on Size's books.

During $20$X$7,$ Size earned net income of $$88,000$ and paid a dividend of $$50,000.$ All of the

inventory on hand at the end of $20$X$6$ was sold during $20$X$7.$ During $20$X$8,$ Size earned net

income of $$90,000$ and paid a dividend of $$50,000.$

Required

a$.$ Record the acquisition of Size's stock on Print's books on December $31,20$X$6.$

b$.$ Record any entries that would be made on December $31,20$X$6,$ on Size's books related to

the business combination if push$-$down accounting is employed.

c$.$ Present all consolidation entries that would appear in the worksheet to prepare a

consolidated balance sheet immediately after the combination.

d$.$ Present all entries that Print would record during $20$X$7$ related to its investment in Size if

Print uses the equity method of accounting for its investment.

e$.$ Present all consolidation entries that would appear in the worksheet to prepare a full set of

consolidated financial statements for the year $20$X$7.$

$f.$ Present all consolidation entries that would appear in the worksheet to prepare a full set of

consolidated financial statements for the year $20$X$8.$