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P4-12 Workpapers (two years after acquisition, fair value/book differentials, adjustments) Pop Corporation acquired an 80 percent interest in Son Corporation for $240,000 on January 1,
P4-12 Workpapers (two years after acquisition, fair value/book differentials, adjustments) Pop Corporation acquired an 80 percent interest in Son Corporation for $240,000 on January 1, 2016, when Son's stockholders' equity consisted of $200,000 capital stock and $25,000 retained earnings. The excess fair value over book value acquired was assigned to plant assets that were undervalued by $50,000 and to goodwill. The undervalued plant assets had a four-year useful life. ADDITIONAL INFORMATION 1. Pop's account receivable includes $5,000 owed by Son. 2. Son mailed its check for $20,000 to Pop on December 30, 2017, in settlement of the advance. 3. A $10,000 dividend was declared by Son on December 30, 2017, but was not recorded by Pop. 4. Financial statements for Pop and Son Corporations for 2017 follow (in thousands): Pop Son $300 $ 900 38 (600) (190) 148 122 (100) $ 170 (150) (90) 60 50 (20 $ 90 Statements of income and Retained Earnings for the Year Ended December 31 Sales Income from Son Cost of sales Operating expenses Net Income Add: Retained earings January 1 Less: Dividends Retained earnings December 31 Balance Sheet at December 31 Cash Accounts receivable--net Inventories Advance to Son Other current assets Land Plant assets-net Investment in Son Total assets Accounts payable Dividends payable Other liabilities Capital stock Retained earnings Total liabilities and stockholders' equity $ 15 20 60 $ 6 26 82 20 80 160 340 280 $ 994 $ 24 EEEEE 5 30 230 $360 100 700 170 $ 994 $ 15 10 45 200 90 $360 REQUIRED: Prepare consolidation workpapers for Pop Corporation and Subsidiary for 2017
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