The following are the balance sheets for Plate and Salad immediately prior to Plate's September 1, 2017, acquisition of Salad:

Consider the following cases:
Case 1
Plate buys 100% of Salad's common stock for $180,000 cash. The fair value of Salad's assets and liabilities equal their book value.
Case 2
Plate buys 100% of Salad's common stock for $210,000 cash. The fair value of Salad's land is $20,000 and of its buildings and equipment is $110,000. All other fair values equal book values.
Required:
1. Prepare the September 1, 2017, journal entry on Plate's books to record the acquisition of Salad.
2. Prepare the elimination entries needed to prepare a consolidated balance sheet immediately after the acquisition.
3. Prepare the consolidated balance sheet immediately after the acquisition.

Transcribed Image Text:

Plate Salad Assets Cash Accounts receivable Inventory Land Bldg. & equip. net $500,000 50,000 00,000 50,000 200,000 $900,000 $100,000 20,000 30,000 0,000 100,000 $260,000 Total Liabilities & equity S 40,000 200,000 300,000 360,000 $900,000 80,000 Accounts payable Bonds payable Common stock& APIC Retained earnings 100,000 80,000 260.000 Total