On January 1, 20X8, Chariot Company acquired 100 percent of Stryder Company for
ID: 2511198 • Letter: O
Question
On January 1, 20X8, Chariot Company acquired 100 percent of Stryder Company for $220,000 cash. The trial balances for the two companies on December 31, 20X8, included the following amounts: Chariot Company Debit Stryder Company Credit Credit $30,000 Cash Accounts Receivable Inventory Land Buikdings and Equipment Investment in Stryder Company Cost of Goods Sok Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Eamings Sales Income from Subsidiany $50,000 60,000 75,000 60,000 300,000 256,000 270,000 30,000 80,000 40,000 40,000 80,000 40,000 120,000 170,000 12,000 63,000 15,000 $120,000 50,000 100,000 200,000 200,000 500,000 51,000 $48,000 27,000 25,000 100,000 70,000 300,000 1.221.000 51,221.000 S570,000$570,000 Additional Information: On the acquisition date, Stryder reported net assets with a book value of $170,000. A total of $10,000 of the acquisition price is applied to goodwill, which was not impaired in 20X8. Stryder's depreciable assets had an estimated economic life of 10 years on the date of combination. The difference between fair value and book value of tangible assets related entirely to buildings and equipment. Chariot used the equity method in accounting for its investment in Stryder. Analysis of receivables and payables revealed that Stryder owed Chariot $10,000 on December 31, 20x8. REQUIRED Give all journal entries that Chariot recorded during 20X8 related to its investment in Stryder. Give all eliminating entries needed to prepare consolidated statements for 20X8. (including optional depreciation entry) a. b.Explanation / Answer
Primary computations:
Fair value of consideration transer
Cash $220,000
$220,000
Book value of net assets received
Common stock 100,000
Retained earnings 70,000
Additional captial 0
170,000
Journal entries
Recording acquisition
Investment in stryder
Cash
220,000
220,000
Recording Chariot 100% Share of income
Investment in stryder
Income from Stryder
55,000
55,000
Recording Chariot 100% Share of dividend
Cash
Investment in Stryder
15,000
15,000
Recording amortisation of excess acquisition price
Investment from stryder
Income in Stryder
17,000
17,000
Book value calculation
Total boob value = Common stock + Retained earnings
Begining book value 170,000 = 100,000 + 70,000
add: Net income 55,000 55,000
Less: Dividend (15,000) (15,000)
Ending book value 210,000 100,000 110,000
Basic consolidation entry
Common stock
Retained earnings
Income from Styrder
Dividend
Income from Stryder
100,000
70,000
55,000
15,000
210,000
Amortised excess value reclassification
Depreciation expenses
Income from Stryder
17,000
17,000
Elimination of inter company accounts
Accounts payable
Accounts receivable
10,000
10,000
optional accumulated depreciation consolidation entry
Investment in stryder
Cash
220,000
220,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.