On June 18, 2024, Down Company purchased 100% ownership of Topp Company for $3,560,000. Immediately prior to the purchases, the companies reported the following amounts:The balance was related to goodwill.

Required
Assuming that Down Company prepares a consolidated statement of financial position immediately after the purchase of Topp Company, answer the following questions: 

a. What amount of total assets will be reported? 

b. What amount of total liabilities will be reported? 

c. What amount of total shareholders’ equity will be reported? 

d. Why is it necessary to eliminate the balance in the account for Down’s Investment in Topp Company when preparing a consolidated statement of financial position?

Transcribed Image Text:

Down Company Topp Company Total Assets $12,900,000 5,670,000 Total Liabilities $5,250,000 3,140,000 Inventory Building Land The acquisition differential was related to the following differences between the fair values and carrying amounts of: Total Shareholders' Equity $7,650,000 2,530,000 Fair Value $ 910,000 1,500,000 1,990,000 Carrying Amount $ 680,000 1,400,000 1,700,000