On January 1, 2011, Packard Company purchased an 80% interest in Sage Company for $600,000. On this

Question:

On January 1, 2011, Packard Company purchased an 80% interest in Sage Company for $600,000. On this date Sage Company had common stock of $150,000 and retained earnings of $400,000. Sage Company’s equipment on the date of Packard Company’s purchase had a book value of $400,000 and a fair value of $600,000. All equipment had an estimated useful life of 10 years on January 2, 2006.

Required:

Prepare the December 31 consolidated financial statements workpaper entries for 2011 and 2012 to allocate and depreciate the difference between book value and the value implied by the purchase price, recording accumulated depreciation as a separate balance.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... 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...