Paco Company acquired 100 percent of the stock of Salad Corp. on December 31, 20X8. The stockholders' equity section of Salad's balance sheet at that date is as follows:
Common Stock $300,000
Additional Paid-In Capital 500,000
Retained Earnings 400,000
Total $1,200,000
Paco financed the acquisition by using $880,000 cash and giving a note payable for $400,000. Book value approximated fair value for all of Salad's assets and liabilities except for buildings which had a fair value $60,000 more than its book value and a remaining useful life of 10 years. Any remaining differential was related to goodwill. Paco has an account payable to Salad in the amount of $30,000.
Required:
a. Present all consolidating entries needed to prepare a consolidated balance sheet immediately following the acquisition.
b. What additional consolidating entry must be prepared at December 31, 20X9?
Answers: 1
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Paco Company acquired 100 percent of the stock of Salad Corp. on December 31, 20X8. The stockholders...
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