The following are the balance sheets for Plate and Salad immediately prior to Plate€™s September 1, 2014, acquisition of Salad:

Consider the following cases:
Case 1
Plate buys 100% of Salad€™s common stock for $180,000 cash. The fair value of Salad€™s assets and liabilities equal their book value.

Case 2
Plate buys 100% of Salad€™s common stock for $210,000 cash. The fair value of Salad€™s land is $20,000 and of its buildings and equipment is $110,000. All other fair values equal book values.

Required:
1. Prepare the September 1, 2014, 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 theacquisition.

Transcribed Image Text:

Plate Salad $500,000 50,000 100,000 50,000 200,000 900,000 $100,000 20,000 30,000 10,000 100,000 260,000 Accounts receivable Bldg. & equip. net Total Liabilities & equity 40,000 200,000 300,000 360,000 900,000 $80,000 Accounts payable Bonds payable Common stock & APIC Retained earnings 100,000 80,000 260,000 Total