Chap003_ClassProblems_solu

Chap003_ClassProblems_solu - Nofail E(1 Common stock 50,000...

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Solutions to Chapter 3 In‐class Problems 1 E3-9 Subsidiary Acquired with Bonds Byte Computer Corporation and Subsidiary Consolidation Worksheet January 2, 20X3 Accounts Byte Computer Corporation Nofail Software Company Consolidation Entries Consolidated Debit Credit Totals Cash $ 200,000 $ 50,000 $ 250,000 Other Assets 400,000 120,000 (2) 60,000 580,000 Investment in Nofail 150,000 (1) (150,000) - Differential (1) 60,000 (2) (60,000) - Total debits $ 750,000 $ 170,000 $ 830,000 Current Liabilities $ 100,000 $ 80,000 $ 180,000 Bonds Payable 140,000 140,000 Bond Premium 10,000 10,000 Common stock 300,000 50,000 (1) 50,000 300,000 Retained earnings 200,000 40,000 (1) 40,000 200,000 Total credits $ 750,000 $ 170,000 $ 830,000
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Solutions to Chapter 3 In‐class Problems 2 Consolidation Entries: ¾ Eliminate Nofail’s common stock and retained earnings, and Nofail’s investment in
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Unformatted text preview: Nofail. E(1): Common stock 50,000 Retained Earnings 40,000 Differential 60,000 Investment in Nofail 150,000 ¾ Assign differential (difference between acquisition cost and book value of net assets) to specific assets and liabilities and goodwill. E(2): Other Assets 60,000 Differential 60,000 Acquisition cost: 150,000 BV of Nofail’s net assets: 90,000 Differential: 60,000 Allocation of differential: Other assets: 60,000 Goodwill: 0 Byte Computer Corporation and Subsidiary Consolidated Balance Sheet January 2, 20X3 Cash ($200,000 + $50,000) $250,000 Other Assets ($400,000 + $180,000) 580,000 Total Assets $830,000 Current Liabilities $180,000 Bonds Payable $140,000 Bond Premium 10,000 150,000 Common Stock 300,000 Retained Earnings 200,000 Total Liabilities and Stockholders' Equity $830,000...
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This note was uploaded on 05/01/2010 for the course MGMT 503 taught by Professor Staff during the Spring '08 term at Purdue.

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Chap003_ClassProblems_solu - Nofail E(1 Common stock 50,000...

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