Exam 4: Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value

Company X acquires 100 percent of the voting shares of Company Y for $275,000 on December 31, 20X8. The fair value of the net assets of Company X at the date of acquisition was $300,000. This is an example of a(n):

On December 31, 20X8, Mercury Corporation acquired 100 percent ownership of Saturn Corporation. On that date, Saturn reported assets and liabilities with book values of $300,000 and $100,000, respectively, common stock outstanding of $50,000, and retained earnings of $150,000. The book values and fair values of Saturn's assets and liabilities were identical except for land which had increased in value by $10,000 and inventories which had decreased by $5,000. -Based on the preceding information, what amount of differential will appear in the eliminating entries required to prepare a consolidated balance sheet immediately after the business combination, if the acquisition price was $240,000?

Silver Corporation acquired 100 percent of Bronze Company on January 1, 20X5, for $350,000. Following are selected account balances from Silver and Bronze Corporation as of December 31, 20X5: Additional Information: 1. On January 1, 20X5 the fair market value of Bronze's assets equaled their book value with the exception of Plant Assets (with an estimated economic life of 6 years) which had a fair market value in excess in Bronze's depreciable assets of $33,000. 2. Silver used the equity-method in accounting for its investment in Bronze. 3. Detailed analysis of receivables and payables showed that Bronze owed Silver $10,000 on December 31, 20X5. Required: a. Give all journal entries recorded by Silver with regard to its investment in Bronze during 20X5. b. Give all eliminating entries needed to prepare a full set of consolidated financial statements for 20X5. c. Prepare a three-part consolidation worksheet as of December 31, 20X5.

Which of the following is true? When companies employ push-down accounting:

Lea Company acquired all of Tenzing Corporation's stock on January 1, 20X6 for $150,000 cash. On December 31, 20X8, the trial balances of the two companies were as follows: Tenzing Corporation reported retained earnings of $75,000 at the date of acquisition. The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of five years from the date of acquisition. At December 31, 20X8, Tenzing owed Lea $4,000 for services provided. -Based on the preceding information, what amount will be reported as total assets in the consolidated balance sheet for 20X8?

Dish Corporation acquired 100 percent of the common stock of Toll Company by issuing 10,000 shares of $10 par common stock with a market value of $60 per share. Summarized balance sheet data for the two companies immediately preceding the acquisition are as follows: Required: Determine the dollar amounts to be presented in the consolidated balance sheet for (1) total assets, (2) total liabilities, and (3) total stockholders' equity.

Pace Corporation acquired 100 percent of Spin Company's common stock on January 1, 20X9. Balance sheet data for the two companies immediately following the acquisition follow: At the date of the business combination, the book values of Spin's net assets and liabilities approximated fair value except for inventory, which had a fair value of $60,000, and land, which had a fair value of $50,000. The fair value of land for Pace Corporation was estimated at $80,000 immediately prior to the acquisition. -Based on the preceding information, what amount of total stockholder's equity will be reported in the consolidated balance sheet prepared immediately after the business combination?