Question
Post Corporation paid $330,000 cash for 75% of the outstanding common stock of Soft Company on January 1, 2020. There was no control premium and
- Post Corporation paid $330,000 cash for 75% of the outstanding common stock of Soft Company on January 1, 2020. There was no control premium and the fair value of the noncontrolling interest was $110,000 on January 1, 2020. Differences between book value and fair value of the net identifiable assets of Soft Company on January 1, 2020, were limited to the following:
Book value Fair value
Inventories $ 25,000 $ 35,000
Building (net) 175,000 173,000
Required:
(i) Prepare the working paper elimination entries E and R (in journal entry format) for Post Corporation and subsidiary on January 1, 2020.
(ii) Complete the following working paper:
Working paper for consolidated balance sheet on date of business combination, January 1, 2020
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| Post Dr (Cr) | Soft Dr (Cr) | Adjustments & Eliminations | Consolidated Dr (Cr) | |
| Debits | Credits | ||||
| Cash | 20,000 | 30,000 |
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| Inventories | 170,000 | 25,000 |
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| Investment in Soft | 330,000 |
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| Building (net) | 230,000 | 175,000 |
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| Accounts payable | (120,000) | (110,000) |
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| Common stock | (380,000) | (25,000) |
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| Add. paid-in capital | (100,000) | (30,000) |
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| Retained earnings | (150,000) | (65,000) |
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| Total | 0 | 0 |
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