P4-37A Push-Down Accounting LO 4-7

On December 31, 20X6, Print Corporation and Size Company enteredinto a business combination in which Print acquired all of Size’scommon stock for $958,000. At the date of combination, Size hadcommon stock outstanding with a par value of $118,000, additionalpaid in capital of $419,000, and retained earnings of $176,000. Thefair values and book values of all Size’s assets and liabilitieswere equal at the date of combination, except for thefollowing:

	Book Value				Fair Value
Inventory		$	61,000			$	66,000
Land			93,000				177,000
Buildings			419,000				510,000
Equipment			510,000				575,000

The buildings had a remaining life of 15 years, and the equipmentwas expected to last another 5 years. In accounting for thebusiness combination, Print decided to use push-down accounting onSize’s books.

During 20X7, Size earned net income of $104,000 and paid a dividendof $58,000. All of the inventory on hand at the end of 20X6 wassold during 20X7. During 20X8, Size earned net income of $106,000and paid a dividend of $58,000.

Required:
a. Record the acquisition of Size's stock on Print's books onDecember 31, 20X6. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)

b. Record any entries that would be made on December 31, 20X6, onSize’s books related to the business combination if push-downaccounting is employed. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)

c. Present all consolidating entries that would appear in theworksheet to prepare a consolidated balance sheet immediately afterthe combination. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)

d. Present all entries that Print would record during 20X7 relatedto its investment in Size if Print uses the equity-method ofaccounting for its investment. (If no entry is required fora transaction/event, select "No journal entry required" in thefirst account field.)

e. Present all consolidating entries that would appear in theworksheet to prepare a full set of consolidated financialstatements for the year 20X7. (If no entry is required fora transaction/event, select "No journal entry required" in thefirst account field.)

f. Present all consolidating entries that would appear in theworksheet to prepare a full set of consolidated financialstatements for the year 20X8. (If no entry is required fora transaction/event, select "No journal entry required" in thefirst account field.)