t t t On January 2, 2020, Parent Corporation acquired 75% of Subsidiary Company's outstanding common stock for $540,000. At that date, the fair value of the noncontrolling interest was $180,000. At the date of combination, Subsidiary Company owed Parent Corporation $7,000 on account. Immediately prior to the combination, the Parent's and Subsidiary's balances per books and Subsidiary's fair values of assets and liabilities were as follows: Parent Company Subsidiary Company Book Balance- - Book Balance- Fair Value Assets: Cash- $ 12,000+ $ 9,000 $ 9,000+ Accounts Receivable- 41,000+ 7 31,000 30,000++ Allowance for Bad Debts- (2,000) (1,000) Inventory 86,000+ 68,000 72,000 Investment in Sub- 540,000+ Land 55,000 + 50,0004 70,000 Buildings & Equipment: 960,000+ 670,000 500,000++ Accumulated Depreciatione (411,000) (220,000) Patent 40,000 Total Assets $ 1,281,000+ $ 607,000 $ 721,000+ # + + + + $ 29,000+ 90,000+ Liabilities & Stockholders' Equity Accounts Payable- Bonds Payable- Common Stock- Additional Paid-in Capitale Retained Earnings- Total Liabilities & Stockholders' Equity t $ 38,000 740,000+ 300,000+ 100,000+ - 103,0004 $ 1,281,000+ $ 29,0004 100,000 200,000 130,000 148,000 $ 607.000 Required: t (1) Prepare the appropriate consolidation adjusting and eliminating entries in general journal format in order to prepare the consolidated workpaper immediately following the business combination. (2) Prepare the consolidation workpaper for the balance sheet as of January 2, 2020 immediately following the business combination (workpaper is on the following page) Supplemental Problem 3-1 Parent Corporation and Subsidiary Consolidation Workpaper- 2-Jan-20- ($ in thousands) Adjustments/Eliminations- Consoli- dated Parent- Subsidiary Debit- Credit Cash- Accounts receivable- Allowance for bad debts- Inventory Investment in Sub- Land: Buildings & equipment- Accumulated depr. Patent- 12 41 (2): 86 540 55 960 (411) Total Assets 1,281 0 0 Accounts payable- Bonds payable 38 740 Common stock Additional paid-in capital- Retained earnings- 300 100 103 Total Liabilities & Stockholders' Equity 1,281 0 0 t t t On January 2, 2020, Parent Corporation acquired 75% of Subsidiary Company's outstanding common stock for $540,000. At that date, the fair value of the noncontrolling interest was $180,000. At the date of combination, Subsidiary Company owed Parent Corporation $7,000 on account. Immediately prior to the combination, the Parent's and Subsidiary's balances per books and Subsidiary's fair values of assets and liabilities were as follows: Parent Company Subsidiary Company Book Balance- - Book Balance- Fair Value Assets: Cash- $ 12,000+ $ 9,000 $ 9,000+ Accounts Receivable- 41,000+ 7 31,000 30,000++ Allowance for Bad Debts- (2,000) (1,000) Inventory 86,000+ 68,000 72,000 Investment in Sub- 540,000+ Land 55,000 + 50,0004 70,000 Buildings & Equipment: 960,000+ 670,000 500,000++ Accumulated Depreciatione (411,000) (220,000) Patent 40,000 Total Assets $ 1,281,000+ $ 607,000 $ 721,000+ # + + + + $ 29,000+ 90,000+ Liabilities & Stockholders' Equity Accounts Payable- Bonds Payable- Common Stock- Additional Paid-in Capitale Retained Earnings- Total Liabilities & Stockholders' Equity t $ 38,000 740,000+ 300,000+ 100,000+ - 103,0004 $ 1,281,000+ $ 29,0004 100,000 200,000 130,000 148,000 $ 607.000 Required: t (1) Prepare the appropriate consolidation adjusting and eliminating entries in general journal format in order to prepare the consolidated workpaper immediately following the business combination. (2) Prepare the consolidation workpaper for the balance sheet as of January 2, 2020 immediately following the business combination (workpaper is on the following page) Supplemental Problem 3-1 Parent Corporation and Subsidiary Consolidation Workpaper- 2-Jan-20- ($ in thousands) Adjustments/Eliminations- Consoli- dated Parent- Subsidiary Debit- Credit Cash- Accounts receivable- Allowance for bad debts- Inventory Investment in Sub- Land: Buildings & equipment- Accumulated depr. Patent- 12 41 (2): 86 540 55 960 (411) Total Assets 1,281 0 0 Accounts payable- Bonds payable 38 740 Common stock Additional paid-in capital- Retained earnings- 300 100 103 Total Liabilities & Stockholders' Equity 1,281 0 0