Question
Par Corporation acquired a 70 % interest in Sol Corporation's outstanding voting common stock on January 1, 2009 for $ 490,000 cash. The stockholder's equity
Par Corporation acquired a 70 % interest in Sol Corporation's outstanding voting common stock on January 1, 2009
for $ 490,000 cash. The stockholder's equity of Sol on this date consisted of $ 500,000 capital stock and $100,000 retained earnings
The difference between the price paid by Parr and the underlying equity acquired in Sol were allocated $ 5,000 to Sol's undervalued inventory $ 14,000 to undervalued buildings, $ 21,000 to undervalued equipment and reminder to goodwill
The undervalued inventory were sold during 2009 and the undervalued buildings and equipment had remaining useful lives of seven years and three years respectively. Depreciaton is straight line
At December 31, 2009 Sols accoutns payable include $ 10,000 owed to Par This $ 10,000 account payable is due January 5, 2010
Par sold equipment with a book value of $ 15,000 for $ 25,000 on June 1, 2009. This is NOT an intercompany sale transaction
Separate financial statements for Par and Sal for 2009 are summarized and presented
Required:
- Provide the entries made by Par on January 1, 2009 and subsequently for the year
- Provide the consolidation /elimination entries at December 31, 2009
- Complete the consolidation worksheet and compute the consolidated totals for Par and Sol for the year ended December 31, 2009
| PAR SOL | Elimination Entries | Consol'd | |||
| CONSOLIDATED WORKSHEET | |||||
| Year ended 31 Dec 2009 | Par | Sol | Debit | Credit | Totals |
| INCOME STATEMENT | |||||
| Sales | 800,000 | 700,000 | |||
| Income of Sol | 60,200 | ||||
| Gain on equipment | 10,000 | ||||
| Cost of Sales | (300,000) | (400,000) | |||
| Depreciation exp | (155,000) | (60,000) | |||
| Other exp | (160,000) | (140,000) | |||
| Noncontrolling | |||||
| interest share | |||||
| Net Income | 255,200 | 100,000 | |||
| Retained Earn Jan 1 | 300,000 | 100,000 | |||
| Net income | 255,200 | 100,000 | |||
| Dividends | (200,000) | (50,000) | |||
| Retained Earn Dec 31 | 355,200 | 150,000 | |||
| BALANCE SHEET | |||||
| Cash | 96,000 | 60,000 | |||
| Accounts Rec net | 100,000 | 70,000 | |||
| Dividens receivable | 14,000 | ||||
| Inventories | 150,000 | 100,000 | |||
| Other current assets | 70,000 | 30,000 | |||
| Land | 50,000 | 100,000 | |||
| Buildings net | 140,000 | 160,000 | |||
| Equpment net | 570,000 | 330,000 | |||
| Investment in Sol | 515,200 | ||||
| Goodwill | |||||
| Total Assets | 1,705,200 | 850,000 | |||
| Liab and Equity | |||||
| Accounts Payable | 200,000 | 85,000 | |||
| Dividens Payable | 100,000 | 20,000 | |||
| Other liabilities | 50,000 | 95,000 | |||
| Capital Stock | 1,000,000 | 500,000 | |||
| Retained Earnings | 355,200 | 150,000 | |||
| Non Control Interest | |||||
| Total Liab & Equity | 1,705,200 | 850,000 | |||
| AFTER COMPLETING THE ABOVE ANSWER THE QUESTIONS ON MOODLE |
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