Show the impact on Company A's 12/31/2016 balance sheet for a purchase of 75% of company B.
Question:
Show the impact on Company A's 12/31/2016 balance sheet for a purchase of 75% of company B.
On January 1, 2016, Company A bought 75% of Company B for $3,500,000
The purchase was funded through issuing $2,000,000 of new stock and a bank loan for$1,500,000.
30,000 shares with a par value of $10 and market value of $100
Make any adjustments to the equity section at 12/31/16 to reflect the stock issuance.
Any excess is allocated as follows:
Undervalued equipment - $250,000, ten year life
Customer List - $100,0000, four year life
Undervalued land - $100,000
Any balance is attributable to Goodwill
Company B sold $300,000 of inventory to Company A. It had a cost of $240,000. Company A still had 20% in inventory at year end.
Show all consolidation and elimination entries.
Prepare a consolidated balance sheet and income statement for 12/31/2016.
Balance SheetBalance 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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Step by Step Answer:
Advanced Accounting
ISBN: 978-0538480284
11th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng