Masterson Company acquires a 80% interest in its subsidiary for a purchase price of $620,800. The excess of the purchase price over the book value of the subsidiary's Stockholders' Equity is allocated to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an unrecorded Patent that the parent valued at $100,000, and Goodwill of $150,000, 80% of which is allocated to the parent.
The parent and the subsidiary report the following balance sheets on the acquisition date:
|
|
Masterson
|
Subsidiary
|
|
|
Masterson
|
Subsidiary
|
|
|
|
|
|
|
|
|
|
Cash
|
mce_markernbsp; 920,753
|
$107,576
|
|
Current Liabilities
|
mce_markernbsp; 814,779
|
$165,648
|
|
Accounts receivable
|
725,760
|
165,648
|
|
Long-term Liabilities
|
3,379,200
|
238,000
|
|
Inventory
|
1,099,980
|
212,772
|
|
Common Stock
|
927,045
|
47,600
|
|
Equity Investment
|
620,800
|
|
|
APIC
|
688,905
|
59,500
|
|
PPE, net
|
5,291,244
|
393,652
|
|
Retained Earnings
|
2,848,608
|
368,900
|
|
|
$8,658,537
|
$879,648
|
|
|
$8,658,537
|
$879,648
|
Prepare the consolidation journal entries on the acquisition date.