Parson Industries purchased 80% of the common stock of Succo Company on January 1, 2010, for $300,000
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Parson Industries purchased 80% of the common stock of Succo Company on January 1, 2010, for $300,000 when Succo Company’s capital consisted of common stock of $200,000, preferred stock of $100,000, other contributed capital of $50,000, and retained earnings of $62,000. The $100 par value preferred is 15%, cumulative and nonparticipating, and has a call price of $104 per share. Dividends on the preferred stock were not paid in 2009. Trial balances for the parent and subsidiary for the December 31, 2011, year-end are presentedbelow.
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Parson Industries Succo Income Statement Company 404,000 $300,000 Sales Dividend Income Cost of Goods Sold Operating Expenses Income Taxes Net Income 4,000 (200,000) (36,400) (160,000) (50,000) 27,000) 63,000 131,400 Parson Succo Retained Earnings Industries Company 157,400 131,400 1/1 Retained Earnings Net Income Less: Dividends Declared 12/31 Retained Earnings $107,000 63,000 (50,000) 120,000 65,000) Balance Sheet Cash and Receivables InventorieS Land Buildings and Equipment $ 396,800 200,000 300,000 697,000 (100,000) 300,000 1,793,800 $205,000 170,000 120,000 245,000 (70,000) ccumulated Depreciation Investment in Succo Company Totals Current Liabilities Bonds Payable Preferred Stock Common Stock, $10 par value Other Contributed Capital Retained Earnings 670,000 370,000 400,000 600,000 200,000 223,800 1,793,800 $100,000 100,000 100,000 200,000 50,000 120,000 670,000 Totals
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Part A Computation and Allocation of Difference between Implied and Book Value Acquired Parent Non Entire Share Controlling Value Share Purchase price and implied value 300000 75000 375000 Less Book v...View the full answer
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