Prince Corp. and Sprite Corp. reported the following balance sheets at January 1, 2014: On January 2,
Question:
On January 2, 2014, Prince issued $36,000 of stock and used the proceeds to purchase 90% of Sprites common stock. The excess of the purchase price over Sprites book value of net assets was allocated 60% to inventory and 40% to goodwill.
Required:
Show the amounts that Prince will report on its January 2, 2014, consolidated balance sheet for the following items under (a) the acquisition method and (b) the purchase method.
1. Current assets.
2. Noncurrent assets.
3. Goodwill.
4. Current liabilities.
5. Noncurrent liabilities.
6. Stockholders equity (controlling interest).
7. Stockholders equity (noncontrolling or minorityinterest).
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...
Step by Step Answer:
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon