Consolidation Working Paper, Simple Example$$

Below are the condensed balance sheets of Princecraft and Sylvan Companies just prior to Princecraft$$s acquisition of all of the voting shares of Sylvan for $$40$ million in cash. The book values of Sylvan Company$$s net assets approximate fair value.

Balance SheetsPrincecraft

CompanySylvan

CompanyCash$ $60,000,000$$ $2,000,000$Other current assets$20,000,0008,000,000$Property and equipment, net$70,000,00015,000,000$Total assets$$150,000,000$$$25,000,000$Total liabilities$ $30,000,000$$ $8,000,000$Common stock$15,000,0005,000,000$Additional paid$-$in capital$45,000,00010,000,000$Retained earnings$60,000,0002,000,000$Total liabilities and equity$$150,000,000$$$25,000,000$

Required$$

a$.$ Prepare the journal entry Princecraft makes to record the acquisition on its own books.

Enter answers in millions $($Example: $$40,000,000$ equals $$40$ million$).$

DescriptionDebitCreditAnswer $1$CashCommon stockGoodwillInvestment in SylvanRetained earningsAnswer $2$Answer $3$Answer $4$CashCommon stockGoodwillInvestment in SylvanRetained earningsAnswer $5$Answer $6$

b$.$ Prepare the consolidation working paper at the date of acquisition.$$

Enter answers in millions$($Example: $$40,000,000$ equals $$40$ million$).$

Use negative signs with your Credit $($Cr$)$ answers in the Dr$($Cr$)$ columns $($not in the Eliminations Credit column$).$

Consolidation Working PaperAccounts Taken From BooksEliminations$($in millions$)$Princecraft

Dr$($Cr$)$Sylvan

Dr$($Cr$)$DebitCreditConsolidated

Balances Dr$($Cr$)$CashAnswer $7$$$2$Answer $8$Other current assetsAnswer $98$Answer $10$Property and equipment, netAnswer $1115$Answer $12$Investment in SylvanAnswer $13$Answer $14($E$)$Answer $15$Answer $16($R$)$Goodwill$($R$)$Answer $17$Answer $18$LiabilitiesAnswer $19(8)$Answer $20$Common stockAnswer $21(5)($E$)$Answer $22$Answer $23$Additional paid$-$in capitalAnswer $24(10)($E$)$Answer $25$Answer $26$Retained earningsAnswer $27(2)($E$)$Answer $28$Answer $29$TotalAnswer $30$Answer $31$Answer $32$Answer $33$Answer $34$

c$.$ Prepare the consolidated balance sheet at the date of acquisition, in good form.$$

Enter answers in millions $($Example$,$ $$22,000,000$ equals $$22$ million$).$

Princecraft Company and Subsidiary

Consolidated Balance Sheet

Date of Acquisition$($in millions$)$AssetsLiabilitiesCashAnswer $35$Total liabilitiesAnswer $36$Other current assetsAnswer $37$Property and equipment, netAnswer $38$Shareholders$$ equityGoodwillAnswer $39$Common stockAnswer $40$Additional paid$-$in capitalAnswer $41$Retained earningsAnswer $42$Total equityAnswer $43$Total assetsAnswer $44$Total liabilities and equityAnswer $45$