P Company purchased 75% of Prairie Co for $696,000 cash on 1/1/2019. Balance sheets for P...

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P Company purchased 75% of Prairie Co for $696,000 cash on 1/1/2019. Balance sheets for P Company and S Company immediately prior to the combination were as follows: P Co S Co BV BV FV Current Assets $1,314,000 $192,000 $192,000 Land 540,000 308,000 626,000 Building and Equipment (net) 1,185,000 100,000 100,000 Total 3,039,000 600,000 918,000 Liabilities $900,000 $150,000 150,000 Common Stock, $20 par value Other Contributed Capital Retained Earnings 1,650,000 240,000 218,000 60,000 271,000 $3,039,000 150,000 Total 600,000 a. Prepare computation and allocation of difference between implied and book values. b. Provide eliminating entry on 1/1/2019 to create consolidated balance sheet. c. Prepare consolidated balance sheet on 1/1/2019. S co YEAR 2020 2021 2022 Net income $40,000 $15,000 $50,000 $18,000 $65,000 Dividend $20,000 d. Assuming the North company uses cost method, provide eliminating entries for 2022. P Company purchased 75% of Prairie Co for $696,000 cash on 1/1/2019. Balance sheets for P Company and S Company immediately prior to the combination were as follows: P Co S Co BV BV FV Current Assets $1,314,000 $192,000 $192,000 Land 540,000 308,000 626,000 Building and Equipment (net) 1,185,000 100,000 100,000 Total 3,039,000 600,000 918,000 Liabilities $900,000 $150,000 150,000 Common Stock, $20 par value Other Contributed Capital Retained Earnings 1,650,000 240,000 218,000 60,000 271,000 $3,039,000 150,000 Total 600,000 a. Prepare computation and allocation of difference between implied and book values. b. Provide eliminating entry on 1/1/2019 to create consolidated balance sheet. c. Prepare consolidated balance sheet on 1/1/2019. S co YEAR 2020 2021 2022 Net income $40,000 $15,000 $50,000 $18,000 $65,000 Dividend $20,000 d. Assuming the North company uses cost method, provide eliminating entries for 2022.

Answer rating: 100% (QA)

a b c d Fair value of Consideration paid Propor... View the full answer