Pas Corporation acquired 80 percent of Sel Corporation's common stock on January 1, 2011, for $210,000 cash.


Pas Corporation acquired 80 percent of Sel Corporation's common stock on January 1, 2011, for $210,000 cash. The stockholders' equity of Sel at this time consisted of $150,000 capital stock and $50,000 retained earnings. The difference between the fair value of Sel and the underlying equity acquired in Sel was due to a $12,500 undervaluation of Sel's inventory, a $25,000 undervaluation of Sel's equipment, and unrecorded patents with a 20-year life. The undervalued inventory items were sold by Sel during 2011, and the undervalued equipment had a remaining useful life of five years. Straight-line depreciation is used. Sel owed Pas $4,000 on accounts payable at December 31, 2011. The separate financial statements of Pas and Sel Corporations at and for the year ended December 31, 2011, are as follows (in thousands):


REQUIRED: Prepare consolidation workpapers for Pas Corporation and Subsidiary at and for the year ended December 31,2011.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Advanced Accounting

ISBN: 9780132568968

11th Edition

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

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