Question

In: Accounting

Pointure Company acquired 80 percent of Souby Company’s outstanding common stock for $664,000 on January 1,...

  1. Pointure Company acquired 80 percent of Souby Company’s outstanding common stock for $664,000 on January 1, 2019, when the book value of Souby’s net assets was equal to $830,000. Pointure uses the equity method to account for investments. Trial Balance items for Pointure and Souby as of December 31, 2019, are as follows:

Pointure

Souby

Debit

Credit

Debit

Credit

Cash

125,000

70,000

Accounts Receivable

396,000

90,000

Inventory

450,000

200,000

Investment in Souby

868,000

Plant & Equipment

755,000

585,000

Other Assets

390,000

230,000

Dividends Declared

50,000

25,000

Revenue

1,140,000

800,000

Salaries Expenses

680,000

325,000

Other Expense

250,000

195,000

Accounts Payable

105,000

30,000

Other Liabilities

95,000

60,000

Common Stock

900,000

350,000

Retained Earnings

1,500,000

480,000

Income From Souby

224,000

Total

3,964,000

3,964,000

1,720,000

1,720,000

  1. Prepare the journal entries on Pointure’s books for the acquisition of Souby on January 1, 2019, as well as any normal equity method entry(ies) related to the investment in Souby Company during 2019.

  1. Give the elimination entry or entries needed to prepare consolidated Financial statements immediately following the business combination

  1. Prepare a consolidation worksheet for 2019 in good form.

Solutions

Expert Solution

Solution:

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

On January 1, 2019, Monica Company acquired 80 percent of Young Company’s outstanding common stock for...
On January 1, 2019, Monica Company acquired 80 percent of Young Company’s outstanding common stock for $888,000. The fair value of the noncontrolling interest at the acquisition date was $222,000. Young reported stockholders’ equity accounts on that date as follows: Common stock—$10 par value $ 300,000 Additional paid-in capital 70,000 Retained earnings 630,000 In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $90,000. Any remaining...
On January 1, 2016, Monica Company acquired 80 percent of Young Company’s outstanding common stock for...
On January 1, 2016, Monica Company acquired 80 percent of Young Company’s outstanding common stock for $728,000. The fair value of the noncontrolling interest at the acquisition date was $182,000. Young reported stockholders’ equity accounts on that date as follows: Common stock—$10 par value $ 300,000 Additional paid-in capital 70,000 Retained earnings 430,000 In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $70,000. Any remaining...
On January 1, 2019, Monica Company acquired 80 percent of Young Company’s outstanding common stock for...
On January 1, 2019, Monica Company acquired 80 percent of Young Company’s outstanding common stock for $776,000. The fair value of the noncontrolling interest at the acquisition date was $194,000. Young reported stockholders’ equity accounts on that date as follows: Common stock—$10 par value $ 200,000 Additional paid-in capital 70,000 Retained earnings 490,000 In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $70,000. Any remaining...
On January 1, 2016, Monica Company acquired 80 percent of Young Company’s outstanding common stock for...
On January 1, 2016, Monica Company acquired 80 percent of Young Company’s outstanding common stock for $728,000. The fair value of the noncontrolling interest at the acquisition date was $182,000. Young reported stockholders’ equity accounts on that date as follows: Common stock—$10 par value $ 300,000 Additional paid-in capital 70,000 Retained earnings 430,000 In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $70,000. Any remaining...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $490,000. Birch reported a $477,500 book value and the fair value of the noncontrolling interest was $122,500 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $192,000 when Cedar had a $141,000 book value and the 20 percent noncontrolling interest was valued at $48,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $504,000. Birch reported a $510,000 book value and the fair value of the noncontrolling interest was $126,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $160,000 when Cedar had a $164,000 book value and the 20 percent noncontrolling interest was valued at $40,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $504,000. Birch reported a $510,000 book value and the fair value of the noncontrolling interest was $126,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $160,000 when Cedar had a $164,000 book value and the 20 percent noncontrolling interest was valued at $40,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $452,000. Birch reported a $505,000 book value and the fair value of the noncontrolling interest was $113,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $112,000 when Cedar had a $104,000 book value and the 20 percent noncontrolling interest was valued at $28,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned...
On January 1, 2016, Monica Company acquired 70 percent of Young Company’s outstanding common stock for...
On January 1, 2016, Monica Company acquired 70 percent of Young Company’s outstanding common stock for $658,000. The fair value of the noncontrolling interest at the acquisition date was $282,000. Young reported stockholders’ equity accounts on that date as follows: Common stock—$10 par value $ 300,000 Additional paid-in capital 40,000 Retained earnings 460,000 In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $40,000. Any remaining...
On January 1, 2016, Monica Company acquired 70 percent of Young Company’s outstanding common stock for...
On January 1, 2016, Monica Company acquired 70 percent of Young Company’s outstanding common stock for $700,000. The fair value of the noncontrolling interest at the acquisition date was $300,000. Young reported stockholders’ equity accounts on that date as follows: Common stock—$10 par value $ 100,000 Additional paid-in capital 100,000 Retained earnings 520,000 In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $40,000. Any remaining...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT