Consolidation Accounting

Facts: On December 31, 2023, Parent Co purchased 95% of Sub Co for $120,000 cash. The Balance Sheet of each corporation just prior to the acquisition is presented below. Additionally, book value and fair value for all of Sub's assets and liabilities are equal, with the exception of property, plant and equipment, whose fair value is $47,000.

Note: The following two Parts of this Case are unrelated. Please account for each Part as a separate set of facts.

Balance sheets before acquisition:

Balance Sheet

Assets

Parent Co

Sub Co

21,000 45,000 45,000

111,000 42,000

153,000

30,000 15,000 45,000

0 55,000 45,000 8,000 108,000

153,000

Cash $170,000 Accounts receivable 60,000 Inventory 50,000

Total current assets Property, plant and equipment, net

Total assets

Liabilities & Stockholders' Equity

Accounts payable Accrued expenses

Total current liabilities Notes payable Common stock Retained earnings Additional paid in capital

Total stockholders' equity Total liabilities & stockholders' equity

Required:

280,000 265,000

$545,000

$70,000 20,000 90,000

180,000 100,000 155,000

20,000 275,000

$545,000

Prepare the Parent Co journal entry to record the purchase of Sub Co.

What is the implied fair value of Sub Co?

Calculate the amount of goodwill implicit in this purchase.

What is the amount of the non-controlling interest share in SubCo at the date of

acquisition?

What is the consolidated depreciation expense to be reflected in the consolidated Income

Statement for 2024 assuming no additional purchases and a 10-year depreciation life for

property, plant and equipment?

Prepare the required workpaper elimination entries for consolidation.

Prepare the December 31, 2023 consolidated Balance Sheet (immediately after

acquisition) showing the adjustments, eliminations and consolidated balances.