Question
On June 10, 20X8, Playoff Corporation acquired 100 percent of Series Company's common stock. Summarized balance...
On June 10, 20X8, Playoff Corporation acquired 100 percent of
Series Company's common stock. Summarized balance sheet data for
the two companies immediately after the stock acquisition are as
follows:
| Playoff Corp. | Series Company | ||||||||||||
| Item | Book Value | Fair Value | |||||||||||
| Cash | $ | 15,000 | $ | 5,000 | $ | 5,000 | |||||||
| Accounts Receivable | 30,000 | 10,000 | 10,000 | ||||||||||
| Inventory | 80,000 | 20,000 | 25,000 | ||||||||||
| Buildings & Equipment (net) | 120,000 | 50,000 | 70,000 | ||||||||||
| Investment in Series Stock | 100,000 | ||||||||||||
| Total | $ | 345,000 | $ | 85,000 | $ | 110,000 | |||||||
| Accounts Payable | $ | 25,000 | $ | 3,000 | $ | 3,000 | |||||||
| Bonds Payable | 150,000 | 25,000 | 25,000 | ||||||||||
| Common Stock | 55,000 | 20,000 | |||||||||||
| Retained Earnings | 115,000 | 37,000 | |||||||||||
| Total | $ | 345,000 | $ | 85,000 | $ | 28,000 | |||||||
Required:
a. Prepare the consolidating entries required to prepare a
consolidated balance sheet immediately after the acquisition of
Series Company shares. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
b. Record the excess value (differential)
reclassification entry.
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Answer #1
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