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Question 4: (10 points) A1, B1, C1, C3 On September 30, 2017, AL Manama Corporation paid $550,000 to acquire 72% of the outstanding common stock
Question 4: (10 points) A1, B1, C1, C3
On September 30, 2017, AL Manama Corporation paid $550,000 to acquire 72% of the outstanding common stock of Ahlia Company which became a subsidiary. Differences between current fair values and carrying amounts of identifiable net assets of Ahlia Company on September 30, 2017, were limited to the following:
Current Fair Values
Carrying Amounts
Inventories
$ 5,000
$ 20,000
building (net)
260,000
140,000
Instructions:
1. Prepare the journal entry to record the investment on September 30, 2017 (4 marks)
2. Complete the following working paper for consolidated balance sheet of AL Manama Corporation and subsidiary. (6 marks)
ALMANAMA CORPORATION AND SUBSIDIARY
Working Paper for Consolidated Balance Sheet
September 30, 2017
Assets
AL Manama Corporation
Ahlia Company
Eliminations
Consolidated
Dr.
Cr.
Inventories
80,000
20,000
Other current assets
60,000
240,000
Investment in Ahlia Co.
550,000
Building (net)
460,000
140,000
Total assets
1,150,000
400,000
Liabilities & Stockholders' Equity
Current liabilities
190,000
30,000
Long-term debt
260,000
90,000
Common stock, $1 par
200,000
70,000
Additional paid-in capital
100,000
50,000
Retained earnings
400,000
160,000
Total liabilities & stockholders' equity
1,150,000
400,000
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Company Accounting
Authors: Ken Leo, John Hoggett, John Sweeting, Jennie Radford
8th Edition
0470819731, 978-0470819739
