Question: What happens to the differential in the consolidation worksheet prepared
What happens to the differential in the consolidation worksheet prepared as of the date of combination? How is it reestablished so that the proper balances can be reported the following year?
Answer to relevant QuestionsExplain why consolidated financial statements become increasingly important when the differential is very large.Although Sloan Company had good earnings reports in 20X5 and 20X6, it had a negative retained earnings balance on December 31, 20X6. Jacobs Corporation purchased 100 percent of Sloan’s common stock on January 1, ...Brindle Company purchased 100 percent of Monroe Company's voting common stock for $648,000 on January 1, 20X4. At that date, Monroe reported assets of $690,000 and liabilities of $230,000. The book values and fair values of ...Reed Corporation acquired 100 percent of Thorne Corporation’s voting common stock on December 31, 20X4, for $395,000. At the date of combination, Thorne reported the following:At December 31, 20X4, the book values of ...Kennelly Corporation acquired all of Short Company's common shares on January 1, 20X5, for $180,000. On that date, the book value of the net assets reported by Short was $150,000. The entire differential was assigned to ...
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