Pop Corporation acquired a 70 percent interest in Stu Corporation on January 1, 2011, for...
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Accounting
Pop Corporation acquired a 70 percent interest in Stu Corporation on January 1, 2011, for $2,800,000, when Stus stockholders equity consisted of $2,000,000 capital stock and $1,200,000 retained earnings. On this date, the book value of Stus assets and liabilities was equal to the fair value, except for inventories that were undervalued by $80,000 and sold in 2011, and plant assets that were undervalued by $160,000 and had a remaining useful life of eight years from January 1. Stus net income and dividends for 2011 were $320,000 and $40,000, respectively.
Separate-company balance sheet information for Pop and Stu Corporations at December 31,
2011, follows (in thousands):
Pop Stu
Cash $ 240 $ 80
Accounts receivable------customers 1,760 800
Accounts receivable from Pop - 40
Dividends receivable 28
Inventories 2,000 1,280
Land 400 600
Plant assets-net 2,800 1,400
Investment in Stu 2,884 ------
$10,112 $4,200
Accounts payable-suppliers $ 1,200 $ 320
Accounts payable to Stu 40 -
Dividends payable 160 40
Long-term debt 2,400 400
Capital stock 4,000 2,000
Retained earnings 2,312 1,440
$10,112 4,200
R E Q U I R E D : Prepare consolidated balance sheet workpapers for Pop Corporation and Subsidiary at
December 31, 2011.
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