Pool Company purchased 90% of the outstanding common stock of Spruce Company on December 31, 2019, for
Question:
Pool Company purchased 90% of the outstanding common stock of Spruce Company on December 31, 2019, for cash. At that time the balance sheet of Spruce Company was as follows:
Current assets......................................................................$1,050,000
Plant and equipment................................................................990,000
Land............................................................................................170,000
Total assets...........................................................................$2,210,000
Liabilities..................................................................................$ 820,000
Common stock, $20 par value.................................................900,000
Other contributed capital.........................................................440,000
Retained earnings.....................................................................150,000
Total.........................................................................................2,310,000
Less treasury stock at cost, 5,000 shares...............................100,000
Total equities........................................................................$2,210,000
Required:
Prepare the elimination entry required for the preparation of a consolidated balance sheet workpaper on December 31, 2019, assuming:
(1) The purchase price of the stock was $1,400,000. Assume that any difference between the book value of net assets and the value implied by the purchase price relates to subsidiary land.
(2) The purchase price of the stock was $1,160,000. Assume that the subsidiary land has a fair value of $180,000, and the other assets and liabilities are fairly valued.
Common StockCommon stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
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:
1 Common StockSpruce 900000 Other Contributed CapitalSpruce 440000 Retained EarningsSpruce 150000 La...View the full answer
