
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Prophet Corporation acquired 75 percent of Seer Corporation's voting common stock
on December 31, 20X4, for $390,000. At the date of combination, Seer reported the
following:
Assets
Current Assets
Long-Term Assets (net)
Total
Event
1
2
$ 220,000
420,000
At December 31, 20X4, the book values of Seer's net assets and liabilities approximated
their fair values, except for buildings, which had a fair value of $80,000 more than book
value, and inventories, which had a fair value of $36,000 more than book value. The fair
value of the noncontrolling interest was determined to be $130,000 at that date.
$ 640,000
Prophet Corporation wishes to prepare a consolidated balance sheet immediately
following the business combination. Prepare the consolidation entry or entries needed
to prepare a consolidated balance sheet at December 31, 20X4.
Inventories
Goodwill
Buildings
Common stock
Retained earnings
Investment in Seer Corporation
Liabilities
Current Liabilities.
Long-Term Liabilities
Common Stock
Retained Earnings
Total
Accounts
$80,000
200,000
120,000
240,000
$ 640,000
Debit
120,000
240,000
36,000
74,000
Credit
360,000
80,000
30,000
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