Exam 3: Consolidated Financial Statements Date of Acquisition

Prepare in general journal form the workpaper entries to eliminate Porter Company's investment in Sewell Company in the preparation of a consolidated balance sheet at the date of acquisition for each of the following independent cases: Any difference between book value of net assets acquired and the value implied by the purchase price relates to subsidiary property,plant,and equipment except for case (b).In case (b)assume that all book values and fair values are the same.

Price Company acquired 75 percent of the common stock of Shandie Corporation on December 31,2016.On the date of acquisition,Price held land with a book value of $150,000 and a fair value of $300,000; Shandie held land with a book value of $100,000 and fair value of $500,000.What amount would land be reported in the consolidated balance sheet prepared immediately after the combination?

P Corporation paid $420,000 for 70% of S Corporation's $10 par common stock on December 31,2016,when S Corporation's stockholders' equity was made up of $300,000 of Common Stock,$90,000 of Other Contributed Capital and $60,000 of Retained Earnings.S's identifiable assets and liabilities reflected their fair values on December 31,2016,except for S's inventory which was undervalued by $60,000 and their land which was undervalued by $25,000.Balance sheets for P and S immediately after the business combination are presented in the partially completed work-paper below. Required: Complete the consolidated balance sheet workpaper for P Corporation and Subsidiary.

Eliminating entries are made to cancel the effects of intercompany transactions and are made on the:

On January 2,2016,Pope Company acquired 90% of the outstanding common stock of Smithwick Company for $480,000 cash.Just before the acquisition,the balance sheets of the two companies were as follows: The fair values of Smithwick's assets and liabilities are equal to their book values with the exception of land. Required: A.Prepare the journal entry necessary to record the purchase of Smithwick's common stock. B.Prepare a consolidated balance sheet at the date of acquisition.

On January 1,2016,Pell Company and Sand Company had condensed balance sheets as follows: On January 2,2016 Pell borrowed $240,000 and used the proceeds to purchase 90% of the outstanding common stock of Sand.This debt is payable in 10 equal annual principal payments,plus interest,starting December 30,2016.Any difference between book value and the value implied by the purchase price relates to land. On Pell's January 2,2016 consolidated balance sheet,current liabilities should be:

Which of the following is a limitation of consolidated financial statements?

Pina Corp.owns 60% of Simon Corp.'s outstanding common stock.On May 1,2016,Pina advanced Simon $90,000 in cash,which was still outstanding at December 31,2016.What portion of this advance should be eliminated in the preparation of the December 31,2016 consolidated balance sheet?

On January 1,2016,Pell Company and Sand Company had condensed balance sheets as follows: On January 2,2016 Pell borrowed $240,000 and used the proceeds to purchase 90% of the outstanding common stock of Sand.This debt is payable in 10 equal annual principal payments,plus interest,starting December 30,2016.Any difference between book value and the value implied by the purchase price relates to land. On Pell's January 2,2016 consolidated balance sheet,noncurrent assets should be:

On January 1,2016,Pent Company and Shelter Company had condensed balance sheets as follows: On January 2,2016 Pent borrowed $180,000 and used the proceeds to purchase 90% of the outstanding common stock of Shelter.This debt is payable in 10 equal annual principal payments,plus interest,starting December 30,2016.Any difference between book value and the value implied by the purchase price relates to land. On Pent's January 2,2016 consolidated balance sheet,noncurrent assets should be:

Under the economic entity concept,consolidated financial statements are intended primarily for the benefit of the:

One reason a parent company may pay an amount less than the book value of the subsidiary's stock acquired is:

Reasons a parent company may pay more than book value for the subsidiary company's stock include all of the following EXCEPT:

Majority-owned subsidiaries should be excluded from the consolidated statements when:

P Company acquired 54,000 shares of the common stock of S Company on January 1,2016,for $950,000 cash.The stockholders' equity section of S Company's balance sheet on that date was as follows: On the date of acquisition,S Company owed P Company $10,000 on open account. Required: Present,in general journal form,the elimination entries for the preparation of a consolidated balance sheet workpaper on January 1,2016.The difference between the value implied by the purchase price of the investment and the book value of the net assets acquired relates to subsidiary land.

A newly acquired subsidiary has pre-existing goodwill on its books.The parent company's consolidated balance sheet will:

On January 1,2016,Prima Corporation acquired 80 percent of Sunder Corporation's voting common stock.Sunders's buildings and equipment had a book value of $300,000 and a fair value of $350,000 at the time of acquisition.At what amount will Sunder's buildings and equipment will be reported in the consolidated statements?