Public Corporation acquired 90 percent of Station Company's voting common stock on January 1, 20X1, for $514,800. At the time of the combination, Station reported common stock outstanding of $127,000 and retained earnings of $390,000, and the fair value of the noncontrolling interest was $57,200. The book value of Station's net assets approximated market value except for patents that had a market value of $55,000 more than their book value. The patents had a remaining economic life of ten years at the date of the business combination. Station reported net income of $75,000 and paid dividends of $24,000 during 20X1. Required: a. What balance did Public report as its investment in Station at December 31, 20X1, assuming Public uses the equity method in accounting for its investment? Balance in investment account b. Prepare the consolidation entry or entries needed to prepare consolidated financial statements at December 31, 20x1. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries A B > Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit 1 Record entry Clear entry view consolidation entries
Public Corporation acquired 90 percent of Station Company's voting common stock on January 1, 20X1, for $514,800. At the time of the combination, Station reported common stock outstanding of $127,000 and retained earnings of $390,000, and the fair value of the noncontrolling interest was $57,200. The book value of Station's net assets approximated market value except for patents that had a market value of $55,000 more than their book value. The patents had a remaining economic life of ten years at the date of the business combination. Station reported net income of $75,000 and paid dividends of $24,000 during 20X1. Required: a. What balance did Public report as its investment in Station at December 31, 20X1, assuming Public uses the equity method in accounting for its investment? Balance in investment account b. Prepare the consolidation entry or entries needed to prepare consolidated financial statements at December 31, 20x1. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries A B > Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit 1 Record entry Clear entry view consolidation entries
Chapter7: Corporations: Reorganizations
Section: Chapter Questions
Problem 27P
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Transcribed Image Text:Public Corporation acquired 90 percent of Station Company's voting common stock on January 1, 20X1, for $514,800. At the time of
the combination, Station reported common stock outstanding of $127,000 and retained earnings of $390,000, and the fair value of the
noncontrolling interest was S57,200. The book value of Station's net assets approximated market value except for patents that had a
market value of $55,000 more than their book value. The patents had a remaining economic life of ten years at the date of the
business combination. Station reported net income of $75,000 and paid dividends of $24,000 during 20X1.
Required:
a. What balance did Public report as its investment in Station at December 31, 20X1, assuming Public uses the equity method in
accounting for its investment?
Balance in investment account
b. Prepare the consolidation entry or entries needed to prepare consolidated financial statements at December 31, 20X1. (If no entry is
required for a transaction/event, select "No journal entry required" in the first account field.)
view transaction list
Consolidation
Worksheet Entries
A
B
>
Record the basic consolidation entry.
Note: Enter debits before credits.
Event
Accounts
Debit
Credit
1
Record entry
Clear entr
view consolidation entries
Transcribed Image Text:view transaction list
Consolidation
Worksheet Entries
< A B
>
Record the excess value (differential) reclassification entry.
Note: Enter debits before credits.
Event
Accounts
Debit
Credit
3.
Record entry
Clear entry
view consolidation entries
view transaction list
Consolidation
Worksheet Entries
A
>
Record the amortized excess value reclassification entry.
Note: Enter debits before credits.
Event
Accounts
Debit
Credit
2
Record entry
Clear entry
view consolidation entries
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