FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Acorn Corporation owns 80 percent of Beet Corporation's common stock. It purchased the shares on January 1, 20X1, for $640,000. At the date of acquisition, the fair value of the noncontrolling interest was $160,000, and Beet reported common stock outstanding of $360,000 and
Beet purchases 70 percent ownership of Corn Company on January 1, 20X3, for $427,000. At that date, the fair value of the noncontrolling interest was $183,000, and Corn reported common stock outstanding of $250,000 and retained earnings of $300,000. In 20X3, Corn reported net income of $42,000 and paid dividends of $20,000. The differential is assigned to buildings and equipment with an economic life of 10 years at the date of acquisition.
Required:
- Prepare the
journal entries recorded by Beet for its investment in Corn during 20X3. - Prepare the journal entries recorded by Acorn for its investment in Beet during 20X3.
- Prepare the consolidation entries related to Beet's investment in Corn and Acorn's investment in Beet needed to prepare consolidated financial statements for Acorn and its subsidiaries at December 31, 20X3.
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