16. Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scrub Company reported assets and liabilities with book values of $420,000 and $165,000, respectively, common stock outstanding of $80,000, and retained earnings of $175,000. The book values and fair values of Scrub's assets and liabilities were identical except for land, which had increased in value by $20,000, and inventories, which had decreased by $7,000. Required: a. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $280,000. Part 1 is done, see below: a. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $280,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list I i No A B Event 1 2 Show Transcribed Text transaction list Accounts Retained earnings Common stock Investment in Scrub Company Land Goodwill Inventories Investment in Scrub Company Debit 175,000 80,000 20,000 12,000 Credit 255,000 7,000 25,000 Please answer part 2: b. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $251,000. Thanks!
16. Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scrub Company reported assets and liabilities with book values of $420,000 and $165,000, respectively, common stock outstanding of $80,000, and retained earnings of $175,000. The book values and fair values of Scrub's assets and liabilities were identical except for land, which had increased in value by $20,000, and inventories, which had decreased by $7,000. Required: a. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $280,000. Part 1 is done, see below: a. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $280,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list I i No A B Event 1 2 Show Transcribed Text transaction list Accounts Retained earnings Common stock Investment in Scrub Company Land Goodwill Inventories Investment in Scrub Company Debit 175,000 80,000 20,000 12,000 Credit 255,000 7,000 25,000 Please answer part 2: b. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $251,000. Thanks!
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 35P
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Transcribed Image Text:16. Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of
acquisition, Scrub Company reported assets and liabilities with book values of $420,000 and $165,000, respectively,
common stock outstanding of $80,000, and retained earnings of $175,000. The book values and fair values of Scrub's
assets and liabilities were identical except for land, which had increased in value by $20,000, and inventories, which had
decreased by $7,000. Required: a. Prepare the following consolidating entries required to prepare a consolidated balance
sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $280,000.
Part 1 is done, see below:
a. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business
combination assuming Power acquired its ownership of Scrub for $280,000. (If no entry is required for a transaction/event, select
"No journal entry required" in the first account field.)
view transaction list
i
No
A
B
Event
1
2
transaction list
Show Transcribed Text
Accounts
Retained earnings
Common stock
Investment in Scrub Company
Land
Goodwill
Inventories
Investment in Scrub Company
Debit
175,000
80,000
20,000
12,000
Credit
255,000
7,000
25,000
Please answer part 2:
b. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the
business combination assuming Power acquired its ownership of Scrub for $251,000.
Thanks!
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