Masterson company acquiresnbspa 80nbspinterest in its


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.

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Financial Accounting: Masterson company acquiresnbspa 80nbspinterest in its
Reference No:- TGS01227823

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