On January 5, 20X1, Alpha Inc. acquired 80% of the outstanding voting shares of Beta Inc. for $2,000,000 cash. Following are the separate balance sheets for the two companies immediately after the stock purchase, as well as fair value information
On January 5, 20X1, Alpha Inc. acquired 80% of the outstanding voting shares of Beta Inc. for $2,000,000 cash. Following are the separate balance sheets for the two companies immediately after the stock purchase, as well as fair value information regarding Beta Inc.:
1. Prepare the entries for adjustments and eliminations required to prepare the consolidated balance sheet immediately after acquisition under the acquisition method.
2. Prepare the consolidated balance sheet immediately after acquisition.
Beta Alpha Book Value Fair Value Assets $ 500,000 $ 500,000 Current assets Fixed assets, net $1,750,000 5,000,000 2,000,000 1,625,000 2,000,000 Investment in Beta Total Assets $8,750,000 $2,125,000 $2,500,000 Liabilities Current liabilities $ 250,000 $ 125,000 $ 125,000 Stockholders' Equity Common stock 7,000,000 1,500,000 Capital in excess of par Retained earnings 500,000 1,000,000 500,000 Total Stockholders' Equity 8,500,000 2,000,000 Total Liabilities and Stockholders' Equity $8,750,000 $2,125,000
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Requirement 1 The elimination entries that Alpha should make in its consolidating worksheet are give…View the full answer
This video is about ways to attempt consolidated balance sheet questions. since the unconsolidated financial statements of parent and subsidiary companies are prepared separately, consolidating the balance sheets of both companies is critical and sometimes becomes complex. the tutorial will guide students on to how questions on attempting questions on consolidated financial statements in an easier yet more effective way.
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