Unit 2 extra problem
C. CONSOLIDATION WORKSHEET P CORPORATION AND S CO. WORKING PAPER FOR CONSOLIDATED BALANCE SHEET 6/30/200X P Corporation Assets Cash Inventories Other Assets Investment in S Plant Goodwill Total Assets S Company Eliminations & Adjustments Debit Credit debit credit debit debit Liabilities & Equity Current Liabilities Long Term Debt Common Stock $5 par Common Stock $10 par Paid In Capital Retained Earnings Total Liabilities & Equity debit debit debit Consolidated P CORPORATION CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 200X Assets Liabilities and Equity Cash Current Liabilities Inventory Long Term debt Other Assets Plant Common Stock 5 Par Paid In Capital Goodwill Retained Earnings Total Total ADVANCED ACCOUNTING UNIT 2 POST PROBLEM - SEPARATE SUBSIDIARY On June 30, 200X P paid $375,000 cash for 100% of the Common Stock of S Company. The transaction is an acquisition of wherein the acquired company is not dissolved. S Company is maintained as a separate subsidiary of P Company. It is still an entity, but in this case P Company owns all of it's stock. Following information is shown prior to acquisition being recorded: P Company Assets Cash Inventories Plant Assets 590,000 Total Liabilities and Capital $580,000 60,000 340,000 Current Liabilities Common Stock $5PV Additional Paid in Capital Retained Earnings $980,000 Total $90,000 100,000 200,000 $980,000 S Company Assets Inventories Other Assets Plant Assets Liabilities and Capital $ 20,000 40,000 140,000 Current Liabilities $30,000 Long Term Liabilities 50,000 Common Stock $10 PV 40,000 Additional Paid in Capital 20,000 Total $200,000 Retained Earnings Total 60,000 $200,000 Differences between identifiable net assets of S Company were: Inventories Plant Current Fair Value $50,000 250,000 Book Value $20,000 140,000 Difference $30,000 110,000 A. Prepare the journal entries showing the purchase B. Prepare a schedule showing the amount of goodwill from this purchase. C Prepare a consolidation worksheet showing the eliminations. D. Prepare a consolidated balance sheet AS OF June 30, 200X using the consolidation worksheet as a basis. C. CONSOLIDATION WORKSHEET P CORPORATION AND S CO. WORKING PAPER FOR CONSOLIDATED BALANCE SHEET 6/30/200X P Corporation Assets Cash Inventories Other Assets Investment in S Plant Goodwill Total Assets Liabilities & Equity Current Liabilities Long Term Debt Common Stock $5 par Common Stock $10 par Paid In Capital Retained Earnings Total Liabilities & Equity 205,000 60,000 S Company 375,000 340,000 980,000 20,000 40,000 140,000 200,000 90,000 - 40,000 20,000 60,000 200,000 Debit Credit 30,000 50,000 100,000 200,000 590,000 980,000 Eliminations & Adjustments NOTE: For the acquisition of 100 % stock by P Ltd. of S Ltd. No entry/adjustment will be made in the books of S Ltd as the stock aquired directly from public 30,000 debit (375,000) credit 110,000 debit 115,000 debit Consolidated 205,000 110,000 40,000 0 590,000 115,000 1,060,000 120,000 50,000 40,000 debit 20,000 debit 60,000 debit - 100,000 0 200,000 590,000 1,060,000 P CORPORATION CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 200X Assets Liabilities and Equity Cash 205,000 Current Liabilities Inventory 110,000 Long Term debt Other Assets 40,000 Plant 590,000 Common Stock 5 Par Paid In Capital Goodwill 115,000 Retained Earnings Total 1,060,000 Total 120,000 50,000 100,000 200,000 590,000 1,060,000 1 Calculation of Book Value of S company Particulars a Total Assets Inventories Other Assets Plant Assets b Total Liabilities Current Liabilities Long Term Liabilities c Book Value (a-b) $ 20000 40000 140000 200000 30000 50000 80000 120000
