80.2K

Verified Solution

Link Copied!

19.

Prepare the following journal entries:

Preapre the consolidated financial statement:

Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1,202, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Soda reported $70,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000 higher than book value and a remaining 10 -year life, and to patents, which had a fair value $35,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31,203, are as follows: On December 31,202, Soda purchased inventory for $32,000 and sold it to Pop for $48,000. Pop resold $27,000 of the inventory (i.e., $27,000 of the $48,000 acquired from Soda) during 203 and had the remaining balance in inventory at December 31,203. During 203, Soda sold inventory purchased for $60,000 to Pop for $90,000, and Pop resold all but $24,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,600 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition. Required: a. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the basic consolidation entry. Record the amortized excess value reclassification entry. Record the excess value (differential) reclassification entry. Record the optional accumulated depreciation consolidation entry. E Record the entry to reverse last year's deferral. F Record the deferral of the unrealized profit on inventory transfers from 202

Answer & Explanation Solved by verified expert

See Answer