Zenith Corporation acquired 70 percent of Down Corporation's common stock on December 31, 20X4, for $102,200....

  

Transcribed Image Text:

Zenith Corporation acquired 70 percent of Down Corporation's common stock on December 31, 20X4, for $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Cash Accounts Receivable Inventory Zenith Corporation $ 50,300 90,000 130,000 Down Corporation $ 21,000 44,000 Land Buildings and Equipment Less: Accumulated Depreciation Investment in Down Corporation Stock Total Assets Accounts Payable Mortgage Payable Common Stock Retained Earnings Total Liabilities and Stockholders' Equity 75,000 60,000 30,000 410,000 250,000 (150,000) (80,000) 102,200 $692,500 $152,500 250,000 $340,000 $ 35,000 180,000 80,000 210,000 40,000 85,000 $692,500 $340,000 At the date of the business combination, the book values of Down's assets and liabilities approx- imated fair value except for inventory, which had a fair value of $81,000, and buildings and equip- ment, which had a fair value of $185,000. At December 31, 20X4, Zenith reported accounts payable of $12,500 to Down, which reported an equal amount in its accounts receivable. Required a. Give the eliminating entry or entries needed to prepare a consolidated balance sheet immedi- ately following the business combination. b. Prepare a consolidated balance sheet workpaper. c. Prepare a consolidated balance sheet in good form. Zenith Corporation acquired 70 percent of Down Corporation's common stock on December 31, 20X4, for $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Cash Accounts Receivable Inventory Zenith Corporation $ 50,300 90,000 130,000 Down Corporation $ 21,000 44,000 Land Buildings and Equipment Less: Accumulated Depreciation Investment in Down Corporation Stock Total Assets Accounts Payable Mortgage Payable Common Stock Retained Earnings Total Liabilities and Stockholders' Equity 75,000 60,000 30,000 410,000 250,000 (150,000) (80,000) 102,200 $692,500 $152,500 250,000 $340,000 $ 35,000 180,000 80,000 210,000 40,000 85,000 $692,500 $340,000 At the date of the business combination, the book values of Down's assets and liabilities approx- imated fair value except for inventory, which had a fair value of $81,000, and buildings and equip- ment, which had a fair value of $185,000. At December 31, 20X4, Zenith reported accounts payable of $12,500 to Down, which reported an equal amount in its accounts receivable. Required a. Give the eliminating entry or entries needed to prepare a consolidated balance sheet immedi- ately following the business combination. b. Prepare a consolidated balance sheet workpaper. c. Prepare a consolidated balance sheet in good form.

Answer rating: 100% (QA)

Answer The correct entry in Barbaras journal would be a debit to Contract Assets f... View the full answer