QUESTION 1 Plum Corporation acquired 80 percent of Saucy Corporation's common shares on January 1, 20X7, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Saucy Corporation. Saucy prepared the following balance sheet as of December 31, 20X8: Cash $70,000 Accounts Payable Bonds Payable. $60,000 $80,000 Common Stock $300,000 ($120,000) $390,000 Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Total Assets Additional Paid-In Capital Retained Earnings Total Liabilities and Equities $40,000.00 $50,000.00 $150,000.00 $50,000.00 $100,000.00 $390,000.00 On January 1, 20X9, Saucy declares a stock dividend of 3,000 shares on its $5 par value common stock. The current market price per share of Saucy stock on January 1, 20X9, is $20. The investment elimination entry required to prepare a consolidated balance sheet immediately after the stock dividend is issued will include a debit to Additional Paid-In Capital for: O A) $65,000. OB) $95,000. OC) $50,000. D) $110,000. QUESTION 2 Based on the preceding information, the investment elimination entry required to prepare a consolidated balance sheet immediately after the stock dividend is issued will include a debit to Retained Earnings for: A) $200,000. B) $60,000. $100,000. $55,000.
QUESTION 1 Plum Corporation acquired 80 percent of Saucy Corporation's common shares on January 1, 20X7, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Saucy Corporation. Saucy prepared the following balance sheet as of December 31, 20X8: Cash $70,000 Accounts Payable Bonds Payable. $60,000 $80,000 Common Stock $300,000 ($120,000) $390,000 Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Total Assets Additional Paid-In Capital Retained Earnings Total Liabilities and Equities $40,000.00 $50,000.00 $150,000.00 $50,000.00 $100,000.00 $390,000.00 On January 1, 20X9, Saucy declares a stock dividend of 3,000 shares on its $5 par value common stock. The current market price per share of Saucy stock on January 1, 20X9, is $20. The investment elimination entry required to prepare a consolidated balance sheet immediately after the stock dividend is issued will include a debit to Additional Paid-In Capital for: O A) $65,000. OB) $95,000. OC) $50,000. D) $110,000. QUESTION 2 Based on the preceding information, the investment elimination entry required to prepare a consolidated balance sheet immediately after the stock dividend is issued will include a debit to Retained Earnings for: A) $200,000. B) $60,000. $100,000. $55,000.
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 1BCRQ
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Transcribed Image Text:QUESTION 1
Plum Corporation acquired 80 percent of Saucy Corporation's common shares on January 1, 20X7, at underlying book value.
At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Saucy Corporation. Saucy
prepared the following balance sheet as of December 31, 20X8:
Cash
$70,000
Accounts Payable
Bonds Payable
$60,000
$80,000
$300,000
($120,000)
$390,000
Accounts Receivable
Inventory
Buildings and Equipment
Less: Accumulated Depreciation
Total Assets
A)
B)
Common Stock
Additional Paid-In Capital
Retained Earnings
Total Liabilities and Equities
On January 1, 20X9, Saucy declares a stock dividend of 3,000 shares on its $5 par value common stock. The current market
price per share of Saucy stock on January 1, 20X9, is $20.
The investment elimination entry required to prepare a consolidated balance sheet immediately after the stock dividend is issued
will include a debit to Additional Paid-In Capital for:
$65,000.
$95,000.
$50,000.
$110,000.
$40,000.00
$50,000.00
$150,000.00
$50,000.00
$100,000.00
$390,000.00
D)
QUESTION 2
Based on the preceding information, the investment elimination entry required to prepare a consolidated balance sheet
immediately after the stock dividend is issued will include a debit to Retained Earnings for:
O A)
$200,000.
B)
$60,000.
$100,000.
$55,000.
5
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