Problem:
P acquired 100% of S's outstanding common stock on 1/1/06 for $400,000. Selected information for S as of 1/1/06 follows:
Capital stock $ 50,000
Retained earnings 250,000
Book Current
Value Value
Inventory 60,000 50,000
Land 170,000 200,000
Bldgs/equip 440,000(a) 500,000
(a) Net of accum depr of $300,000.
Assume P elected to use non-push-down accounting.
a. Prepare the entry to record the combination.
b. Prepare an analysis of the investment account by components.
c. Prepare all consolidation entries as of 1/1/06.