Question
Question: Perry Corporation purchased 90 percent of Smith Company's outstanding voting stock on January 1, 2015, at underlying book value.At that date, the fair value
Question:Perry Corporation purchased 90 percent of Smith Company's outstanding voting stock on January 1, 2015, at underlying book value.At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Smith Company.Perry also purchased $150,000, 6%, five-year bonds directly from Smith on January 1, 2015, for $156,000.The bonds pay interest annually (not semi-annually) on December 31.The effective interest rate is 5.0742%.The trial balances of the companies as of December 31, 2017, are as follows on the next page.
Instructions:
a.Prepare the journal entry or entries for 2017 on Perry's books related to the investment in Smith Company stock.These are the journal entries actually recorded in Perry's accounts.
b.Prepare the journal entry or entries for 2017 on Perry's books related to the investment in Smith Company bonds.These are the journal entries actually recorded in Perry's accounts.
c.Prepare the journal entry or entries for 2017 on Smith's books related to the bonds payable.These are the journal entries actually recorded in Smith's accounts.
d.Prepare the consolidation entries for a consolidated worksheet for 2017.
e.Prepare a consolidated worksheet for 2017 (three-part).
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