On January 1, 2012, Porter Company purchased an 80% interest in Salem Company for $260,000. On this

Question:

On January 1, 2012, Porter Company purchased an 80% interest in Salem Company for $260,000. On this date, Salem Company had common stock of $207,000 and retained earnings of $130,500.

An examination of Salem Companyâ€™s balance sheet revealed the following comparisons between book and fair values:

Required:
A. Determine the amounts that should be allocated to Salem Companyâ€™s assets on the consolidated financial statements workpaper on January 1, 2012.
B. Prepare the January 1, 2012, consolidated financial statements workpaper entries to eliminate the investment account and to allocate the difference between book value and the value implied by the purchaseprice.

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... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...