Hi,

I need help figuring out what i did wrong.

Assume that Parent Company decides to acquire Sub Company for $564,000 of debentures

Sub Company Balance Sheet Assets, Liabilities & Equities

Book Value Fair Value

Cash $40,000 $40,000 AR $15,000 $10,000

Inventory $105,000 $200,000

Land $60,000 $100,000

Plant and Equipment $400,000 $300,000

Less: Accumulated Depreciation -$150,000

Goodwill $10,000

Patent $0 $0

Total Assets $480,000 $650,000

AP $50,000 $50,000

Common Stock $100,000

Additional Paid In Capital $60,000

Retained Earnings $270,000

Total Liabilities & Equity $480,000

***

This was my answer:

Prepare the consolidating journal entries for a 100%Asset Acquisition

Account Amount DR CR

Investment in Parent Company $564,000 $564,000

Current Liabilities $50,000 $50,000

Accumulated Depreciation $150,000 $150,000

Cash and Receivables $55,000 $55,000

Inventory $105,000 $105,000

Land $60,000 $60,000

Plant and Equipment $400,000 $400,000

Goodwill $10,000 $10,000

Gain on Sale of Net Assets $134,000 $134,000

Common Stock $100,000 $100,000

Additional Paid-In Capital $60,000 $60,000

Retained Earnings $270,000 $270,000

Gain on Sale of Net Assets $134,000 $134,000

Investment in Parent Company $564,000 $564,000

***

Any explanation of where I went wrong would be greatly appreciated.

Thank you, Lindy