Paper Company acquired 80 percent of Scissor Companys outstanding common stock for $296,000 on January 1, 20X8,
Question:
Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for $296,000 on January 1, 20X8, when the book value of Scissor’s net assets was equal to $370,000. Paper uses the equity method to account for investments. Trial balance data for Paper and Scissor as of January 1, 20X8, are as follows:
Required
a. Prepare the journal entry on Paper’s books for the acquisition of Scissor Co. on January 1, 20X8.
b. Prepare a consolidation worksheet on the acquisition date, January 1, 20X8, in good form.
c. Prepare a consolidated balance sheet on the acquisition date, January 1, 20X8, in goodform.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Paper Company Scissor Company Assets Cash Accounts Receivable Inventory Investment in Scissor Stock 109,000 25,000 37,000 125,000 87,000 65,000 296,000 Land Buildings & Equipment Accumulated Depreciation 280,000 125,000 875,000 250,000 (500,000) (24,000) 1,250,000 500,000 Total Assets Liabilities & Stockholders Equity Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Equity 95,000 30,000 250,000 100,000 625,000 250,000 280,000 120,000 1,250,000 500,000
Step by Step Answer:
a Equity Method Entries on Paper Cos Books Investment in Scissor Co 296000 Cash 29600...View the full answer
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
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This video is about ways to attempt consolidated balance sheet questions. since the unconsolidated financial statements of parent and subsidiary companies are prepared separately, consolidating the balance sheets of both companies is critical and sometimes becomes complex. the tutorial will guide students on to how questions on attempting questions on consolidated financial statements in an easier yet more effective way.
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