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Pop Corporation acquired a 70 percent interest in Son Corporation on January 1 2016 for $420,000 cash, when Son s equity consisted of $300000 capital stock and $200000 retained earnings

Pop Corporation acquired a 70 percent interest in Son Corporation on January 1, 2016, for $420,000 cash, when Son s equity consisted of $300,000 capital stock and $200,000 retained earnings. On July 1, 2017, Pop acquired an additional 10 percent interest in Son for $67,500, to bring its interest in Son to 80 percent. The financial statements of Pop and Son Corporations at and for the year ended December 31, 2017, are as follows (in thousands): ADDITIONAL INFORMATION 1. The fair value/book value differential from Pop s two purchases of Son was goodwill. 2. Pop Corporation sold inventory items to Son during 2016 for $60,000, at a gross profit of $10,000. During 2017, Pop s sales to Son were $48,000, at a gross profit of $8,000. Half of the 2016 intercompany sales were inventoried by Son at year-end 2016, and three-fourths of the 2017 sales remained unsold by Son at year-end 2017. Son owes Pop $25,000 from 2017 purchases. 3. At year-end 2016, Son purchased land from Pop for $20,000. The cost of this land to Pop was $12,000. 4. Pop sold machinery with a book value of $40,000 to Son for $80,000 on July 8, 2017. The machinery had a five-year useful life at that time. Son uses straight-line depreciation without considering salvage value on the machinery. 5. Pop uses a one-line consolidation in accounting for Son. Both Pop and Son Corporations declared dividends for 2017 in equal amounts in June and December. REQUIRED: Prepare a workpaper to consolidate the financial

Jun 16 2020 View more View Less

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