Consolidating Eliminating Entries, Date of Acquisition: U.S. GAAP and IFRSPlummer Corporation acquired 90 percent of Softek Technologies’ voting stock by issuing 200,000 shares of $1 par common stock with a fair value of $100,000,000. In addition, Plummer paid $2,000,000 in cash to the consultants and accountants who advised in the acquisition. Softek’s shareholders’ equity at the date of acquisition is as follows:Common stock$400,000Additional paid-in capital20,000,000Retained deficit(10,000,000)Accumulated other comprehensive loss(1,000,000)Treasury stock(500,000)Total$8,900,000 Softek's assets and liabilities were carried at fair value except as noted below: Book ValueFair ValuePlant assets, net$12,000,000$6,000,000Trademarks--2,000,000Customer lists--3,000,000 The fair value of the noncontrolling interest is estimated to be $9,000,000 at the date of acquisition. (b) Prepare the working paper consolidation eliminating entries at the date of acquisition, following IFRS and the alternative valuation method for noncontrolling interests.Enter all your answers in thousands, round to the nearest thousand, when appropriate.Consolidation JournalDescriptionDebitCredit(E)Common stockAdditional paid-in capitalRetained deficitAccumulated OCLTreasury stockInvestment in Softek+Noncontrolling interest in Softek(R)TrademarksCustomer listsGoodwillNoncontrolling interest in SoftekPlant assets, netInvestment in Softek◆400 ✓20,000 ✓0 ✓0✓0✓0 ✓0✓2,000 ✓3,000 ✓10,110 x81,100 x0✔0 ✓OOOO00✓1,000 ✓500 ✓8,010 ✓8900000101,100 x6,000 *10,000

A business combination is a transaction in which a buyer takes over control of another company (the…

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 17E

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Consolidating Eliminating Entries, Date of Acquisition: U.S. GAAP and IFRS

Plummer Corporation acquired 90 percent of Softek Technologies’ voting stock by issuing 200,000 shares of $1 par common stock with a fair value of $100,000,000. In addition, Plummer paid $2,000,000 in cash to the consultants and accountants who advised in the acquisition. Softek’s shareholders’ equity at the date of acquisition is as follows:

Common stock	$400,000
Additional paid-in capital	20,000,000
Retained deficit	(10,000,000)
Accumulated other comprehensive loss	(1,000,000)
Treasury stock	(500,000)
Total	$8,900,000

Softek's assets and liabilities were carried at fair value except as noted below:

	Book Value	Fair Value
Plant assets, net	$12,000,000	$6,000,000
Trademarks	--	2,000,000
Customer lists	--	3,000,000

The fair value of the noncontrolling interest is estimated to be $9,000,000 at the date of acquisition.

(b) Prepare the working paper consolidation eliminating entries at the date of acquisition, following IFRS and the alternative valuation method for noncontrolling interests.
Enter all your answers in thousands, round to the nearest thousand, when appropriate.
Consolidation Journal
Description
Debit
Credit
(E)
Common stock
Additional paid-in capital
Retained deficit
Accumulated OCL
Treasury stock
Investment in Softek
+
Noncontrolling interest in Softek
(R)
Trademarks
Customer lists
Goodwill
Noncontrolling interest in Softek
Plant assets, net
Investment in Softek
◆
400 ✓
20,000 ✓
0 ✓
0✓
0✓
0 ✓
0✓
2,000 ✓
3,000 ✓
10,110 x
81,100 x
0✔
0 ✓
OOOO
0
0✓
1,000 ✓
500 ✓
8,010 ✓
890
0
0
0
0
101,100 x
6,000 *
10,000

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