Balance Sheet for Dex Company and Ed Company on December 31, 2023 are as follows: Dex Company Ed Company Cash P850,000 P75,000 Other Assets 2,200,000 425,000 Total Assets P3,050,000 P500,000 Liabilities P1,200,000 P100,000 Common Stock, P50 par 2,000,000 - Common Stock, P10 par - 250,000 Additional Paid-in Capital 500,000 - Retained Earnings (600,000) 150,000 Total Liabilities and Equity P3,050,000 P500,000 On this date, Dex Company acquired 80% of the stock of Ed Company. Instructions: Prepare a consolidated balance sheet and the eliminating entries as of December 31, 2023, under each set of conditions listed below. Subsidiary stock is acquired for cash of P350,000. The difference between the investment balance and the book value of the interest acquired is regarded as evidence of goodwill identified with the subsidiary company. Subsidiary stock is acquired in exchange for 5,000 shares of the parent company stock, and the investment accounts is recorded at P300,000, the current market value of the shares issued. The difference between the investment balance an the book value of the interest acquired is regarded as evidence of the overstatement of certain assets of Ed Company and asset accounts are adjusted to bring the book value of subsidiary shares into agreement with the amount paid for the by the parent.

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 18P

Related questions

Question

Balance Sheet for Dex Company and Ed Company on December 31, 2023 are as follows:

	Dex Company	Ed Company
Cash	P850,000	P75,000
Other Assets	2,200,000	425,000
Total Assets	P3,050,000	P500,000
Liabilities	P1,200,000	P100,000
Common Stock, P50 par	2,000,000	-
Common Stock, P10 par	-	250,000
Additional Paid-in Capital	500,000	-
Retained Earnings	(600,000)	150,000
Total Liabilities and Equity	P3,050,000	P500,000

On this date, Dex Company acquired 80% of the stock of Ed Company.

Instructions: Prepare a consolidated balance sheet and the eliminating entries as of December 31, 2023, under each set of conditions listed below.

Subsidiary stock is acquired for cash of P350,000. The difference between the investment balance and the book value of the interest acquired is regarded as evidence of goodwill identified with the subsidiary company.
Subsidiary stock is acquired in exchange for 5,000 shares of the parent company stock, and the investment accounts is recorded at P300,000, the current market value of the shares issued. The difference between the investment balance an the book value of the interest acquired is regarded as evidence of the overstatement of certain assets of Ed Company and asset accounts are adjusted to bring the book value of subsidiary shares into agreement with the amount paid for the by the parent.

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