Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. At that date,the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheetdata:Assets$ 713,000 Accounts PayableBonds Payable$ 104,000195,000Common Stock128,000Total$ 713,000Retained EarningsTotal286,000$ 713,000Round reported net income of $79,000 for 20X2 and paid dividends of $26,000.Required:a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round usingthe equity method.b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.Complete this question by enter

When a company is acquired by another company many journal entries are recorded in the books of both…

Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets $ 713,000 Accounts Payable Bonds Payable Common Stock $ 104,000 195,000 128,000 Retained Earnings 286,000 $ 713,000 Total $ 713,000 Total Round reported net income of $79,000 for 20X2 and paid dividends of $26,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.

Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets $ 713,000 Accounts Payable Bonds Payable Common Stock $ 104,000 195,000 128,000 Retained Earnings 286,000 $ 713,000 Total $ 713,000 Total Round reported net income of $79,000 for 20X2 and paid dividends of $26,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 24E

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