Question: On January 1 2010 Perez Company purchased 90 of the

On January 1, 2010, Perez Company purchased 90% of the capital stock of Sanchez Company for $85,000. Sanchez Company had capital stock of $70,000 and retained earnings of $12,000 at that time. On December 31, 2014, the trial balances of the two companies were:

Any difference between book value and the value implied by the purchase price relates to goodwill.

A. What method is being used by Perez to account for its investment in Sanchez Company?
How can you tell?
B. Prepare a workpaper for the preparation of consolidated financial statements on12/31/14.

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  • CreatedMarch 13, 2015
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