Question

Purple Company acquired 80 percent of Silver Company's outstanding common stock for $592,000 on January 1, 20X7. On the date of acquisition, the book value and fair value of Silver Company's net assets were equal. Purple Company uses the equity method to account for investments. Trial balance data for Purple and Silver as of January 1, 20X7 are as follows:

	Purple Company	Silver Company
Assets: Cash	218,000	50,000
Receivables	130,000	74,000
Inventory	250,000	174,000
Investment in Silver Company	592,000
Land	560,000	250,000
Depreciable Assets	1,750,000	500,000
Accumulated Depreciation	-1,000,000	-48,000
Total Assets	2,500,000	1 ,000,000
Liabilities & Stockholders' Equity
Accounts Payable	190,000	60,000
Bonds Payable	500,000	200,000
Common Stock	1,250,000	500,000
Retained Earnings	560,000	240,000
Total Liabilities & Equity	2,500,000	1,000,000

Immediately after acquisition, the consolidation worksheet was completed with all of the appropriate elimination entries (including pre-acquisition accumulated depreciation). The last column of the worksheet showing the consolidated totals has been left blank. Fill in the consolidated totals and identify the account marked with a "?" that will be included on the consolidated balance sheet.

Answer 1

	Purple	Silver	Adjustment	Consolidation amount
Cash	218,000	50,000		268,000
Receivables	130,000	74,000		204,000
Inventory	250,000	174,000		424,000
Investment in Silver	592,000		-592,000	-
Land	560,000	250,000	-	810,000
Depreciable assets	1,750,000	500,000		2,250,000
Accumulated depreciation	-1,000,000	-48,000	-	-1,048,000
Total assets	2,500,000	1,000,000	-592,000	2,908,000
Liabilities & Stockholder's Equity
Accounts payable	190,000	60,000		250,000
Bonds payable	500,000	200,000	-	700,000
Common stock	1,250,000	500,000	-500,000	1,250,000
Retained earnings	560,000	240,000	-240,000	560,000
Non controlling interest			148,000	148,000
Total liabilities & stockholder's equity	2,500,000	1,000,000	-740,000	2,908,000