Father, Inc., buys 80 percent of the outstanding common stock of Sam Corporation on January 1, 2011,

Question:

Father, Inc., buys 80 percent of the outstanding of Sam on January 1, 2011, for $680,000 cash. At the acquisition date, Sam€™s total fair value was assessed at $850,000 although Sam€™s book value was only $600,000. Also, several individual items on Sam€™s financial records had fair values that differed from their book values as follows:

Father, Inc., buys 80 percent of the outstanding common stock

For internal reporting purposes, Father, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2011, for both companies. Using the acquisition method, determine consolidated balances for this business combination (through either individual computations or the use of aworksheet).

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...