P Corporation paid $420,000 for 70% of S Corporation’s $10 par common stock on December 31, 2013, when S Corporation’s stockholders’ equity was made up of $300,000 of Common Stock, $90,000 of Other Contributed Capital and $60,000 of Retained Earnings. S’s identifiable assets and liabilities reflected their fair values on December 31, 2013, except for S’s inventory which was undervalued by $60,000 and their land which was undervalued by $25,000. Balance sheets for P and S immediately after the business combination are presented in the partially completed work-paper below.
Eliminations
P
S
Debit
Credit
Noncontrolling Interest
Consolidated Balances
ASSETS
Cash
$40,000
$30,000
Accounts
receivable-net
30,000
45,000
Inventories
185,000
165,000
Land
45,000
120,000
Plant assets-
net
480,000
240,000
Investment in
S Corp.
420,000
Difference between implied and book value
Goodwill
Total Assets
$1,200,000
$600,000
EQUITIES
Current
liabilities
$170,000
$150,000
Capital stock
600,000
300,000
Additional paid-in capital
150,000
90,000
Retained earnings
280,000
60,000
Noncontrolling interest
Total Equities
$1,200,000
$600,000
Answers: 2
Other questions on the subject: Business
Business, 22.06.2019 07:00, ladybugys
Pennewell publishing inc. (pp) is a zero growth company. it currently has zero debt and its earnings before interest and taxes (ebit) are $80,000. pp's current cost of equity is 10%, and its tax rate is 40%. the firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. refer to the data for pennewell publishing inc. (pp). pp is considering changing its capital structure to one with 30% debt and 70% equity, based on market values. the debt would have an interest rate of 8%. the new funds would be used to repurchase stock. it is estimated that the increase in risk resulting from the added leverage would cause the required rate of return on equity to rise to 12%. if this plan were carried out, what would be pp's new value of operations? a. $484,359 b. $521,173 c. $584,653 d. $560,748 e. $487,805
Answers: 1
Business, 22.06.2019 07:30, maskythegamer
Why has the free enterprise system been modified to include some government intervention?
Answers: 1
Business, 22.06.2019 08:30, dezmondpowell
Which of the following is an example of search costs? a.) driving to a faraway place to find available goods b.) buying goods in some special way that is outside the normal channels c.) paying a premium cost for goods d.) selling extra goods for a discount price
Answers: 1
Do you know the correct answer?
P Corporation paid $420,000 for 70% of S Corporation’s $10 par common stock on December 31, 2013, wh...
Questions in other subjects:
Physics, 04.02.2020 11:48
Mathematics, 04.02.2020 11:48
Mathematics, 04.02.2020 11:49
Social Studies, 04.02.2020 11:49
