On January 1, 2009, Pabst Company acquired 80% of Secor Company's common stock and 30% of Secor

Question:

On January 1, 2009, Pabst Company acquired 80% of Secor Company's common stock and 30% of Secor Company's 10% preferred stock. Pabst Company paid $680,000 for the common stock and $135,000 for the preferred stock. The preferred stock is cumulative and nonparticipating and has a call price of $104. On the date of acquisition, there were no dividends in arrears. On January 1, 2009, Secor Company reported the following account balances:

10% Preferred Stock ($100 par value) $ ............................................400,000

Common Stock ($10 par value) ......................................................500,000

Other Contributed Capital (Sale of common stock in excess of par value) ....100,000

Retained Earnings .....................................................................230,000

Total .................................................................................$1,230,000

Condensed pre-closing trial balances for the two companies at December 31, 2014 are presented below

On January 1, 2009, Pabst Company acquired 80% of Secor
On January 1, 2009, Pabst Company acquired 80% of Secor

On December 31, 2014, dividends on the preferred stock were in arrears for 2013 and 2014.
Required:
Prepare a consolidated statements work paper for the year ended December 31, 2014. Assume that any difference between the implied value and book value of Secor is attributable to an undervaluation in the land of Secor Company in the case of common stock, and any difference between the implied value of preferred stock and the book value is assignable to other contributed capital or to the non controlling interest.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Advanced Accounting

ISBN: 978-1119119364

6th edition

Authors: Debra Jeter, Paul Chaney

Question Posted: