Problem - The two following separate cases show the financial position of a parent company and its subsidiary company on November 30, 2014, just after the parent had purchased 90% of the subsidiary's stock:
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Case I
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Case II
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P Company
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S Company
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P Company
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S Company
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Current assets
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$ 874,700
|
$257,900
|
$ 784,500
|
$278,000
|
|
Investment in S Company
|
188,400
|
|
188,400
|
|
|
Long-term assets
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1,390,700
|
400,500
|
1,204,900
|
400,500
|
|
Other assets
|
90,700
|
40,300
|
69,500
|
69,800
|
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Total
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$2,544,500
|
$698,700
|
$2,247,300
|
$748,300
|
|
Current liabilities
|
$ 636,400
|
$269,000
|
$ 707,000
|
$259,700
|
|
Long-term liabilities
|
856,900
|
287,100
|
916,200
|
270,200
|
|
Common stock
|
595,300
|
178,700
|
595,300
|
178,700
|
|
Retained earnings
|
455,900
|
(36,100 )
|
28,800
|
39,700
|
|
Total
|
$2,544,500
|
$698,700
|
$2,247,300
|
$748,300
|
Assume that Company S's balance sheet is the same as the balance sheet used in Case I (from part a). Suppose that there were 50,000 shares of S Company common stock outstanding and that Company P acquired 90% of the shares for $4.50 a share. Shortly after acquisition, the non-controlling shares were selling for $4.25 a share. Prepare a computation and allocation of difference schedule considering this information.