Question
Pop Company acquired all of Soda Corporation's common shares on January 2, 20X3, for $789,000. At the date of combination, Soda's balance sheet appeared as
Pop Company acquired all of Soda Corporation's common shares on January 2, 20X3, for $789,000. At the date of combination, Soda's balance sheet appeared as follows:
Assets | Amounts | Liabilities | Amounts |
Cash & Receivables | $34,000 | Current Payables | $25,000 |
Inventory | $165,000 | Note Payable | $100,000 |
Land | $60,000 | Stockholders' Equity common stock | $200,000 |
Building | $250,000 | Additional Capital | $425,000 |
Equipment | $320,000 | Retained Earnings | $79,000 |
Total | $829,000 | $829.00 |
The fair values of all of Soda's assets and liabilities were equal to their book values except for its fixed assets. Soda's land had a fair value of $75,000; the buildings, a fair value of $300,000; and the equipment, a fair value of $340,000. Pop Company decided to employ push-down accounting for the acquisition of Soda Corporation. Subsequent to the combination, Soda continued to operate as a separate company.
Part A: Record the acquisition of Soda's stock on Pop's books (Journal entry)
All I have is the Investment in Soda Corporation and Cash
Part B: Prepare any entries that would be made on Soda's books related to the business combination, assuming push-down accounting is used.
All I have is land, buildings and equipment
Part C: Prepare all consolidation entries that would appear in a consolidation worksheet for Pop Company and its subsidiary prepared immediately following the combination.
All I have is common stock-Soda Corporation and Retained earnings
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