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    Entry For The Acquisition

    Uploaded by

    Enalem Otsuepme
    1. The document records the acquisition of a subsidiary through an investment of 165,000 cash. Goodwill of 15,000 is recognized. 2. Working paper entries eliminate the subsidiary's common stock, share premium, and retained earnings against the investment. 3. The consolidated financial statements combine the parent and subsidiary by eliminating intercompany balances and transactions. Total assets and equity are shown consolidated.

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    Entry For The Acquisition

    Uploaded by

    Enalem Otsuepme
    36 views5 pages
    1. The document records the acquisition of a subsidiary through an investment of 165,000 cash. Goodwill of 15,000 is recognized. 2. Working paper entries eliminate the subsidiary's common stock, share premium, and retained earnings against the investment. 3. The consolidated financial statements combine the parent and subsidiary by eliminating intercompany balances and transactions. Total assets and equity are shown consolidated.

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    For educational purpose

    Original Title

    ULOABC_WEEK-5

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    1. The document records the acquisition of a subsidiary through an investment of 165,000 cash. Goodwill of 15,000 is recognized. 2. Working paper entries eliminate the subsidiary's common stock, share premium, and retained earnings against the investment. 3. The consolidated financial statements combine the parent and subsidiary by eliminating intercompany balances and transactions. Total assets and equity are shown consolidated.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    36 views5 pages

    Entry For The Acquisition

    Uploaded by

    Enalem Otsuepme
    1. The document records the acquisition of a subsidiary through an investment of 165,000 cash. Goodwill of 15,000 is recognized. 2. Working paper entries eliminate the subsidiary's common stock, share premium, and retained earnings against the investment. 3. The consolidated financial statements combine the parent and subsidiary by eliminating intercompany balances and transactions. Total assets and equity are shown consolidated.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 5

    1.

    Entry for the acquisition


    Investment In Subsidiary 165,000
    Cash 165,000

    Consideration Given 165,000


    Less: Net Assets at FV -150,000
    Goodwill 15,000

    2. Working Paper Elimination Entries


    Common Stock-Sub. 75,000
    Share Premium-Sub. 45,000
    Retained Earnings-Sub. 30,000
    Goodwill 15,000
    Investment in Subsidiary 165,000

    3. Preparation of Consolidated Financial Statements


    Eliminations
    Parent Subsidiary Dr Cr Consolidated
    Cash 180,000 180,000
    Accounts Receivable 60,000 48,000 108,000
    Inventory 75,000 30,000 105,000
    PPE 270,000 237,000 507,000
    Goodwill 15,000 15,000
    Investment in Subsidiary 165,000 165,000
    TOTAL ASSETS 750,000 315,000 915,000

    Accounts Payable 420,000 165,000 585,000


    Common Stock:
    Parent 150,000 150,000
    Subsidiary 75,000 75,000
    Share Premium:
    Parent 120,000 120,000
    Subsidiary 45,000 45,000
    Retained Earnings:
    Parent 60,000 60,000
    Subsidiary 30,000 30,000
    TOTAL LIAB and EQUITY 750,000 315,000 915,000
    Let's Analyze (Week 6-7)

    1. Record the transactions given


    Investment in Subsidiary 1,200,000
    Common Stock 1,000,000
    Share Premium 200,000

    Share Premium-P 20,000


    Cash 20,000

    Retained Earnings-P 50,000


    Cash 50,000

    2. Compute for the Goodwill


    Consideration Given 1,200,000
    Less: Net Assets at FV -930,000
    Goodwill 270,000

    3. Elimination
    Common Stock-S 400,000
    Share Premium-S 280,000
    Retained Earnings-S 200,000
    Investment in Subsidiary 880,000

    Goodwill 270,000
    Land 50,000
    investment in subsidiary 320,000

    4. Preparation of Consolidated FS
    Elimination
    Palisade Salisbury Dr Cr Consolidated
    Current Assets 260,000 50,000 310,000
    Equipment-Net 440,000 480,000 920,000
    Buildings-Net 600,000 200,000 800,000
    Land 100,000 200,000 50,000 350,000
    Goodwill 270,000 270,000
    Investment in Subsidiary 1,200,000 1,200,000 0
    TOTAL ASSETS 1,400,000 930,000 2,650,000

    Current Liab 100,000 120,000 220,000


    Common Stock:
    Parent 1,000,000 1,000,000 2,000,000
    Subsidiary 400,000 400,000
    Share Premium:
    Parent 100,000 20,000 200,000 280,000
    Subsidiary 280,000 280,000
    Retained Earnings:
    Parent 200,000 50,000 150,000
    Subsidiary 200,000 200,000
    TOTAL LIAB and EQUITY 1,400,000 1,000,000 2,650,000
    In A Nutshell (Week 6-7)

    1. Record the transactions upon acquisition


    Investment in Subsidiary 1,200,000
    Common Stocks-P 1,000,000
    Share Premium-P 200,000

    Share Premium 20,000


    Retained Earnings 50,000
    Cash 70,000

    2. Compute for Goodwill


    Consideration Given:
    Controlling Interest 1,200,000
    NCI 480,000
    Total 1,680,000
    Less: Net Assets at FV -930,000
    Goodwill 750,000

    3. Preparation of Allocation Schedule

    Total Parent (80%) NCI (20%)


    Consideration Given 1,680,000 1,200,000 480,000
    Less: Net Assets at BV -880,000 -704,000 -176,000
    Excess 800,000 496,000 304,000
    Less: Adj due to consideration of FV
    Land (250,000-200,000) -50,000
    Goodwill 750,000

    4. Working Paper Elimination Entries


    Common Stock-S 400,000
    Share Premium-S 280,000
    Retained Earnings-S 200,000
    Investment in Subsidiary 704,000
    Non-controlling Interest 176,000

    Land 50,000
    Goodwill 750,000
    Investment in Subsidiary 496,000
    NCI 304,000
    5. Preparation of Consolidated FS
    Elimination
    Palisade Salisbury Dr Cr Consolidated
    Current Assets 260,000 50,000 310,000
    Equipment-Net 440,000 480,000 920,000
    Buildings-Net 600,000 200,000 800,000
    Land 100,000 200,000 50,000 350,000
    Goodwill 750,000 750,000
    Investment in Subsidiary: 1,200,000
    Net Assets at BV 704,000
    Excess 496,000
    TOTAL ASSETS 1,400,000 930,000 3,130,000

    Current Liab 100,000 120,000 220,000


    Common Stock:
    Parent 1,000,000 1,000,000 2,000,000
    Subsidiary 400,000 400,000
    Share Premium:
    Parent 100,000 20,000 200,000 280,000
    Subsidiary 280,000 280,000
    Retained Earnings:
    Parent 200,000 50,000 150,000
    Subsidiary 200,000 200,000
    Non-Controlling Interest:
    Net Assets at BV 176,000
    Excess 304,000 480,000
    TOTAL LIAB and EQUITY 1,400,000 1,000,000 3,130,000

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