Blank Corporation acquired 100 percent of Faith Corporation’s common stock on De

Question

Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $190,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:

At the date of the business combination, the book values of Faith’s net assets and liabilities approximated fair value. Assume Faith Corporation’s accumulated depreciation on buildings and equipment on the acquisition date was $13,000.

  

Give the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Prepare a consolidated balance sheet worksheet. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)

  Item Blank Faith Corporation Corporation   Assets   Cash $ 67,000 $ 21,000   Accounts Receivable 82,000 39,000   Inventory 111,000 64,000   Buildings and Equipment (net) 230,000 166,000   Investment in Faith Corporation Stock 190,000   Total Assets $ 680,000 $ 290,000   Liabilities and Stockholders’ Equity   Accounts Payable $ 90,000 $ 20,000   Notes Payable 134,000 80,000   Common Stock 83,000 49,000   Retained Earnings 373,000 141,000   Total Liabilities and Stockholders’ Equity $ 680,000 $ 290,000

Explanation / Answer

(a) Consolidation Entries :-

Investment in Faith- Dr 190000

Cash –Cr 190000

(Recorded the Initial Investment in Faith)

Accumulated Depreciation – Dr   13000

Buildings & Equipmnet   -   Cr   13000

(b) Consolidation Balance Sheet Worksheet :-

Blank

Faith

Dr

Cr

Consolidated

Balance Sheet

Cash

67000

21000

88000

A/c Receivable

82000

39000

121000

Inventory

111000

64000

175000

Buildings & Equipment (net)

230000

166000

13000

13000

396000

Investment in Faith

190000

--------

--------

190000

0

Total Assets

680000

290000

13000

203000

780000

A/c Payable

90000

20000

110000

Bonds Payable

134000

80000

214000

Common Stock

83000

49000

49000

83000

Retained Earnings

373000

141000

141000

373000

Total Liability & Equity

680000

290000

190000

780000

Blank

Faith

Dr

Cr

Consolidated

Balance Sheet

Cash

67000

21000

88000

A/c Receivable

82000

39000

121000

Inventory

111000

64000

175000

Buildings & Equipment (net)

230000

166000

13000

13000

396000

Investment in Faith

190000

--------

--------

190000

0

Total Assets

680000

290000

13000

203000

780000

A/c Payable

90000

20000

110000

Bonds Payable

134000

80000

214000

Common Stock

83000

49000

49000

83000

Retained Earnings

373000

141000

141000

373000

Total Liability & Equity

680000

290000

190000

780000

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