Pop Corporation purchased a 75 percent interest in Son Corporation in the open market on January 1,
Question:
Pop Corporation purchased a 75 percent interest in Son Corporation in the open market on January 1, 2017, for $690,000. A summary of Son's stockholders' equity on December 31, 2016 and 2017, is as follows (in thousands):
On January 1, 2018, Son Corporation sold an additional 10,000 shares of its own $10 par stock for $30 per share. Pop assigns any excess/deficiency of fair value over book value to goodwill.
REQUIRED:
Compute the following:
1. The underlying book value of the interest in Son held by Pop on December 31, 2017.
2. Pop's percentage ownership interest in Son on January 3, 2018, assuming that Pop purchased the 10,000 additional shares directly from Son.
3. Pop's investment in Son on January 3, 2018, assuming that Pop purchased the additional shares directly from Son.
4. Pop's percentage ownership interest in Son on January 3, 2018, assuming that Son sold the 10,000 additional shares to investors outside the consolidated entity.
5. Pop's investment in Son on January 3, 2018, assuming that Son sold the 10,000 additional shares to investors outside the consolidated entity and no gain or loss is recognized.
Corporation 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...
Transcribed Image Text:
December 3tT Capital stock, $10 par Additional paid-in capital Retained earnings 2016 $400 300 100 $800 2017 $ 400 300 300 $1,000 Total stockholders' equity
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Preliminary computations Investment cost January 1 2017 690000 Implied total fair value of Son 69000...View the full answer
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