Question

On January 1, 2017, Knight Corporation purchases all the outstanding shares of Craig Company for $950,000. It has been decided that Craig Company will use push-down accounting principles to account for this transaction. The current balance sheet is stated at historical cost.
The following balance sheet is prepared for Craig Company on January 1, 2017:
Knight Corporation receives the following appraisals for Craig Company’s assets and liabilities:
Cash . . . . . . . . . . . . . . . . . . . . . . $ 80,000
Accounts receivable . . . . . . . . . . 260,000
Prepaid expenses . . . . . . . . . . . . 20,000
Land. . . . . . . . . . . . . . . . . . . . . . . 250,000
Building (net) . . . . . . . . . . . . . . . . 700,000
Current liabilities . . . . . . . . . . . . . 90,000
Bonds payable . . . . . . . . . . . . . . 280,000
Deferred tax liability . . . . . . . . . . 40,000
1. Record the investment.
2. Prepare the value analysis schedule and the determination and distribution of excess schedule.
3. Record the adjustments on the books of Craig Company.
4. Prepare the entries that would be made on the consolidated worksheet to eliminate the investment.


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  • CreatedApril 10, 2015
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