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Panther Corporation currently holds an 85 percent interest in Solano Systems, and reports the noncontrolling interest...

Panther Corporation currently holds an 85 percent interest in Solano Systems, and reports the noncontrolling interest in Solano at $3,500,000 on its balance sheet. Panther acquires the remaining 15 percent interest in Solano, paying the following consideration: Cash of $4,500,000, 100,000 new shares of Panther, having apar value of $0.50 per share and a fair value of $18/share, and notes payable of $400,000.

Prepare Panther’s journal entry to record acquisition of the noncontrolling interest in Solano

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Expert Solution

Calculation of Purchase Consideration:

Cash                                =$4,500,000

Shares                             =$1,800,000(1,00,000*18)

Notes payable                =$4,00,000

Purchase Consideration=$6,700,000

Journal entries in the books of Panther Corporation:

Particulars

L.f

Debit

Credit

Business purchase a/c                      Dr

       To liquidator of solano systems a/c

(Being Consideration due for business acquired)

Net assets a/c                                      Dr

Goodwill a/c                                        Dr

       To business purchase a/c

(Being Incorporation of assets and Liabilities)

Liquidator of Solano Systems a/c      Dr

          To equity share capital a/c

          To Securities Premium a/c

           To Cash a/c

            To Notes Payable a/c  

(Being settlement made to Liquidator of solano Systems)  

$6,700,000

$3,500,000

$3,200,000

$6,700,000

$6,700,000

$6,700,000

$50,000

$1,750,000

$4,500,000

4,00,000


Working notes:

Calculation of Share Capital and Securities Premium:

Share capital =1,00,000*0.50

=50,000

Securities Premium =1,00,000*17.5

=1,750,000

ekkarill92 answered 2 years ago
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