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Consolidation Accounting ABC Inc. purchased all of the outstanding common shares of XYZ Inc. for...

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Accounting

Consolidation Accounting ABC Inc. purchased all of the outstanding common shares of XYZ Inc. for $100 million cash. At the time of the acquisition, the fair value of XYZ was $80 million.

Presented below are the condensed balance sheets for ABC and XYZ immediately prior to the acquisition:

(in millions)ABC Inc.XYZ Inc.

Assets$150$100

Liabilities$30$20

Shareholders equity12080

Total$150$100

Required

Prepare ABCs (a) unconsolidated balance sheet immediately after making the equity investment in XYZ and (b) the consolidated balance sheet immediately following the acquisition.

(a) Unconsolidated Balance Sheet

ABC Inc.

(in millions)

Investment in Equity Affiliate

Other assets

Total

Liabilities

Shareholders equity

Total

(b) Consolidated Balance Sheet

Use a negative sign with answers in the consolidating adjustments column to show an amount being removed (an eliminating entry).

ABC Inc. (in millions) XYZ, Inc. (in millions)Consolidating Adjustments (in millions)Consolidated ABC Inc. (in millions)

Investment in equity affiliates

Other assets

Goodwill

Total

Liabilities

Shareholders equity

Total

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