The balance sheets of Kim Ltd. and Steinbach Co. on December 31, Year 2, just before the transaction described below, were as follows: 

On December 31, Year 2, Kim purchased 60% of Steinbach’s outstanding common shares for $135,600 in cash. Coincidentally, the carrying amounts of Steinbach’s assets and liabilities were equal to fair value. 

Required 

(a) Prepare the journal entries, if any, for Kim Ltd. and for Steinbach Co. to record this transaction. 

(b) Prepare balance sheets for Kim Ltd. and for Steinbach Co. at December 31, Year 2, after recording the transaction noted above. 

(c) Prepare a consolidated balance sheet for Kim Ltd. after the transaction noted above.

Transcribed Image Text:

Cash and receivables Inventory Property and equipment (net) Current liabilities Long-term debt Common shares Retained earnings Kim $351,000 146,000 179,000 $676,000 $124,000 303,000 100,000 149,000 $676,000 Steinbach $ 75,000 122,000 264,000 $461,000 $110,000 125,000 150,000 76,000 $461,000