Prime Company acquired of the common stock of Second Company on January 1, year one, for The consideration given was proportional to Second's fair value. On that date, Second had the following trial balance: 85% $510,000 account debit Additional paid in capital Building (12-year life) 250,000 Common stock Current assets 170,000 Equipment (6-yr life) 160,000 Land 110,000 Liabilities (due in 4 years) Retained earnings 1/year 1 Totals 690,000 credit 100,000 170,000 300,000 120,000 690,000 During year one, Second reported net income of During year one, Sonny paid dividends of During year two, Second reported net income of During year two, Sonny paid dividends of On January 1, year one, fair values were: $60,000 $30,000 $80,000 $40,000 Land Building Equipment $146,000 $274,000 $196,000 There was no impairment of any goodwill arising from the acquisition. 1. Please indicate clearly which method you choose for Prime to use to account for its acquisition of Second Company. 2. Use the data for the Prime Company acquisition of the Second Company to prepare the consolidation worksheet entries for the December 31, year one, worksheet. 3. Use the data for the Prime Company acquisition of the Second Company to prepare the consolidation worksheet entries for the December 31, year two, worksheet.
Purchase Consideration paid on 1 January year one = $ 5,10,000 Calculation of Fair value of net assets : Fixed... View the full answer