Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Par Corporation acquired 87.5 percent ownership of Sub Corporation on January 1, 20X8, for $350,000. At that date, Sub reported common stock outstanding of $75,000
Par Corporation acquired 87.5 percent ownership of Sub Corporation on January 1, 20X8, for $350,000. At that date, Sub reported common stock outstanding of $75,000 and retained earnings of $150,000. The fair value of the noncontrolling interest was $50,000. Sub's equipment had a fair value that was $25,000 greater than book value and a remaining economic life of five years at the date of the business combination. Although goodwill is not amortized, Par concluded at December 31, 20X8 that goodwill from its acquisition of Sub was impaired and the correct carrying amount was $110,000. Sub reported net income of $40,000 and paid dividends of $20,000 in 20X8. Required: 1. Provide the journal entries recorded by Par during 20X8 on its books if it accounts for its investment in Sub using the equity method. 2. Prepare the following entries necessary to prepare a consolidation worksheet for 20X8: basic consolidation entry, amortization of excess value (reclassification) entry, excess value (reclassification) entry
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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