Question

Refer to the balance sheets of Plate and Salad in the previous problem. Assume that Plate buys 80% of Salad’s common stock for $180,000 cash. The fair value of Salad’s land is $20,000, the fair value of Salad’s buildings and equipment is $110,000, and all other fair values equal book values.

Required:
Provide answers to the following under (a) the acquisition method and (b) the purchase method.
1. Prepare the journal entry on Plate’s books to record the acquisition of Salad.
2. Prepare the elimination entries needed to prepare a consolidated balance sheet immediately after the acquisition.
3. Prepare the consolidated balance sheet immediately after the acquisition.



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  • CreatedSeptember 10, 2014
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