Problem 3-1 The two following separate cases show the financial position of a pa

Question

Problem 3-1 The two following separate cases show the financial position of a parent company and its subsidiary company on November 30, 2014, just after the parent had purchased 90% of the subsidiary's stock; Case I Case I P Company P Company s 780,200 188,700 1,208,300 69,400 S Company 872,000 $262,400 S Company $279,300 Current assets Investment in S Company Long-term assets Other assets 188,700 1,394,700 89,800 398,500 70,600 $2,545,200 $701,000 $2,246,600 $748,400 398,500 40,100 Total Current liabilities Long-term liabilities Common stock Retained earnings $ 701,400 $259,900 272,400 180,600 35,500 $2,545,200 $701,000 $2,246,600 $748,400 $639,000 857,300 595,700 453,200 $269,300 291,300 180,600 (40,200) 927,100 595,700 22,400 Total

Explanation / Answer

Consolidated Balance Sheet Worksheet November 30th 2014     Adjustments ITEM P Company S Company DR CR Consolidated Current Assets $             872,000.00 $             262,400.00 $   1,134,400.00 Investment in S company $             188,700.00 $ 188,700.00 Differnce between implied and book value $    62,340.00 $    62,340.00 Long term assets $         1,394,700.00 $             398,500.00 $    62,340.00 $   1,855,540.00 Other Assets $               89,800.00 $               40,100.00 $       129,900.00 Total Assets $         2,545,200.00 $             701,000.00 $   3,119,840.00 Current Liabilities $             639,000.00 $             269,300.00 $       908,300.00 Long Term Liablities $             857,300.00 $             291,300.00 $   1,148,600.00 Common Stock $             595,700.00 $             180,600.00 $ 180,600.00 $       595,700.00 Retained Earnings $             453,200.00 $             (40,200.00) $    40,200.00 $       453,200.00 Non Controlling Interest $    14,040.00 $         14,040.00 Total Liabilities & Equity $         2,545,200.00 $             701,000.00 $ 305,280.00 $ 305,280.00 $   3,119,840.00 Adjusting & Eliminating Entries Common Stock $             180,600.00 Retained Earnings $             (40,200.00) Differential=($188700+$14040-180600-(-40200) $               62,340.00       Investment in S Company Stock $             188,700.00       Non controlling Interest=($180600-40200)*10% $               14,040.00

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