Question

Paula Company acquires 100% of the common stock of Shannon Company for $200,000 cash to acquire...

Paula Company acquires 100% of the common stock of Shannon Company for $200,000 cash to acquire the 100% interest in Shannon Company. On the acquisition date, Shannon’s ledger shows Common Stock $120,000 and Retained Earnings $70,000. Complete the worksheet for the following accounts: Paula—Investment in Shannon Common Stock, Shannon—Common Stock, and Shannon—Retained Earnings and for the excess of cost over book value.

Eliminations
Paula Company Shannon Company Dr. Cr. Consolidated Data
Investment in Shannon Common Stock $

200000

 $ $ $

200000

 $
Excess of Cost Over Book Value

?

?

?

?

?
Common Stock

120000

120000
Retained Earnings

70000

70000
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Answer #1
Eliminations
Paula Company Shannon Company Dr. Cr. Consolidated Data
Investment in Shannon Common Stock $200,000 $0 $ $200,000 $0
Excess of Cost Over Book Value $10,000 $10,000
Common Stock $120,000 $120,000 $0
Retained Earnings $70,000 $70,000 $0

In consolidated data, everything else would be eliminated, only the excess of cost over book value which would be assigned to specific reasons or as in general Goodwill will be reflected with a debit balance of $10,000 in consolidated data as an asset.

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