On December 31, 2019, Purple Company purchased 80% of the common stock of Sage Company for $1,300,000.
Question:
On December 31, 2019, Purple Company purchased 80% of the common stock of Sage Company for $1,300,000. On this date, Sage had total owners' equity of $650,000 (common stock $100,000; other paid-in capital, $250,000; and retained earnings, $300,000). Any excess of cost over book value is due to the under or overvaluation of certain assets and liabilities. Assets and liabilities with differences in book and fair values are provided in the following table:
Book | Fair | |
Value | Value | |
Current assets | $500,000 | $700,000 |
Accounts receivable | 200,000 | 150,000 |
Inventory | 800,000 | 850,000 |
Land | 100,000 | 450,000 |
Buildings and equipment, net | 700,000 | 800,000 |
Current liabilities | 800,000 | 850,000 |
Bonds payable | 850,000 | 900,000 |
Remaining excess, if any, is due to goodwill.
Prepare the consolidated worksheet at December 31, 2019.
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield