Week3 HW - Week #3 Solutions Exercise 3-3 Part A Investment...

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Week #3 Solutions Exercise 3-3 Part A Investment in Sun Company 192,000 Cash 192,000 Part B PRUNCE COMPANY AND SUBSIDIARY Consolidated Balance Sheet January 2, 2011 Assets Cash ($260,000 + $64,000 – $192,000) $132,000 Accounts Receivable 165,000 Inventory 171,000 Plant and Equipment (net) 484,000 Land ($63,000 + $32,000 + $28,333*) 123,333 Total Assets $1,075,333 Liabilities and Stockholders’ Equity Accounts Payable $151,000 Mortgage Payable 111,000 Total Liabilities 262,000 Noncontrolling Interest ($192,000/0.9 × 0.1) $21,333 Common Stock 400,000 Other Contributed Capital 208,000 Retained Earnings 184,000 Total Stockholders’ Equity 813,333 Total Liabilities and Stockholders’ Equity $1,075,333 * [$192,000/0.9 – ($70,000 + $20,000 + $95,000)] = $28,333 Exercise 3-4 Part A Investment in Swartz Company ($60 × 1,500) 90,000 Common Stock ($20 × 1,500) 30,000 Other Contributed Capital ($40 × 1,500) 60,000 Other Contributed Capital 1,700 Cash 1,700 Part B Computation and Allocation of Difference Parent Non- Entire Share Controlling Value Share Purchase price and implied value $90,000 0 90,000 Less: Book value of equity acquired 83,000* 0 83,000 Difference between implied and book value 7,000 0 7,000 Goodwill (7,000) (0) ( 7,000)
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Balance - 0 - - 0 - - 0 - * $40,000 + $24,000 + $19,000 = $83,000 Part C Peach Company and Subsidiary Consolidated Balance Sheet January 1, 2010 Assets Cash ($73,000 + $13,000 - $1,700) $ 84,300 Accounts Receivable 114,000 Inventory 83,000 Plant and Equipment 138,000 Land 48,000 Goodwill* 7,000 Total Assets $ 474,300 Liabilities and Stockholders’ Equity Accounts Payable $84,000 Notes Payable 103,000 Total Liabilities $187,000 Common Stock ($100,000 + $30,000) $130,000 Other Contributed Capital ($60,000 + $60,000 - $1,700) 118,300 Retained Earnings 39,000 Total Stockholders’ Equity 287,300 Total Liabilities and Stockholders’ Equity
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Week3 HW - Week #3 Solutions Exercise 3-3 Part A Investment...

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