Question: The Krause Corporation acquired 80 percent of the 100 000 outstanding

The Krause Corporation acquired 80 percent of the 100,000 outstanding voting shares of Leahy, Inc., for $6.30 per share on January 1, 2011. The remaining 20 percent of Leahy’s shares also traded actively at $6.30 per share before and after Krause’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Leahy’s underlying accounts except that a building with a 5-year life was undervalued by $45,000 and a fully amortized trademark with an estimated 10-year remaining life had a $60,000 fair value. At the acquisition date, Leahy reported common stock of $100,000 and a retained earnings balance of $280,000. Following are the separate financial statements for the year ending December 31, 2012:

a. Prepare a worksheet to consolidate these two companies as of December 31, 2012.
b. Prepare a 2012 consolidated income statement for Krause and Leahy.
c. If instead the noncontrolling interest shares of Leahy had traded for $4.85 surrounding Krause’s acquisition date, how would the consolidated statementschange?

Sale on SolutionInn
  • CreatedOctober 04, 2014
  • Files Included
Post your question