Prepare the consolidated balance sheet and eliminating entries on January 1, 2019. On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company forP350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow:ParentSubsidiaryParentCompanyCompanyValueCash700,000100,000100,000Inventory300,00050,00055,000PPE1,000,000350,000365,000Liabilities500,000200,000200,000Outstanding SharesRetained earnings1,000,000200,000500,000100,000Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow:INCOME AND RETAINED EARNINGSParentSubsidiaryCompanyCompanySales800,000550,000Dividend income40,000Cost of salesOperating expenses(480,000)(60,000)300,000(250,000)(150,000)Net income150,000Retained earnings, Jan 1, 2019500,000100,000Dividends declared(100,000)(50,000)Retained earnings end700,000200,000BALANCE SHEETCash300,000125,000Receivables100,00030,000Inventory650,00045,000Investment in Subsidiary350,000PPE900,0002,300,000350,000Total550,000Liabilities600,000150,000Outstanding sharesRetained earnings1,000,000200,000700,000200,000Total2,300,000550,000Additional Information:The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years.• Subsidiary Company owes Parent Company P5,000 on December 31, 2x19. Consolidated Balance SheetJANUARY 1, 2019BALANCE SHEETParent Company Subsidiary CompanyDebitsDebitsCONSOLIDATED BALANCECash300,000100,000Receivables100,000Inventory650,00050,000Investment in Subsidiary350,000PPE900,000350,000Total2,300,000500,000Liabilities600,000200,000Outstanding shares1,000,000200,000Retained earnings700,000100,000Total2,300,000500,000

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Description: Prepare the consolidated balance sheet and eliminating entries on January 1, 2019. On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company forP350,000. The financial statements of Parent and Subsidiary Company

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On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow: Parent Subsidiary Parent Company Company Value Cash 700,000 100,000 100,000 Inventory 300,000 50,000 55,000

On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow: Parent Subsidiary Parent Company Company Value Cash 700,000 100,000 100,000 Inventory 300,000 50,000 55,000

Financial Accounting Intro Concepts Meth/Uses

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ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter14: Intercorporate Investments In Common Stock

Section: Chapter Questions

Problem 20E

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