Assume that a parent company acquires a 70% interest in a subsidiary for a purchase price of $1,078,000. The excess of total fair value of controlling and noncontrolling interests over book value is assigned to; a building (PPE net) that is worth $100,000 more than book value, an unrecorded patent valued at $200,000 and goodwill valued at $300,000. Goodwill is assigned proportionately to the controlling and noncontrolling interests Submission Requirements:
Using the ACT470_Mod03-Option01.xlsx Excel spreadsheet in the Module 3 folder:
Prepare the consolidated balance sheet at the date of acquisition by placing the appropriate entries in their respective debit/credit column cells.
Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is an [E] or [A] entry.
Use Excel formulas to derive the Consolidated column amounts and totals.
Using the "Home" key in Excel, go to the "Styles" area and highlight the [E] and [A] entry cells in different shades.
Consolidation Entries
Parent Subsidia Dr Cr Consolidated
Cash 920,000 215,000 0
Accounts receivable 782,000 330,000 0
Inventory 1,100,000 425,000 0
Equity investment 1,078,000 0
Property, plant and equipment (PPE), net 5,400,000 800,000
Patent 0
Goodwill 0
Total assets 9,280,000 1,770,000 0
Current liabilities 810,000 330,000 0
Long-term liabilities 4,000,000 500,000
Common stock 920,000 90,000 0
Additional paid-in capital 700,000 120,000 0
Retained earnings 2,850,000 730,000 0
Noncontrolling interest 0
Total liabilities and equity 9,280,000 1,770,000 0

Explanation:

The objective here is to prepare the consolidated balance sheet at the date of acquisition by placing the appropriate entries in their respective debit/credit column cells.

To do that; We need to find both Consolidation entries  and Consolidation Spreadsheet on the acquisition date from the given data set from the question.

From the question:

A parent company acquires a 70% interest in a subsidiary for a purchase price of $1,078,000.

Consideration paid by the parent company for 70% share    $10,78,000

Non Control Interest fair Value (30%)                                       $ 4,62,000      

Total fair value of subsidiary on the acquisition date               $15,40,000

Less: Book value subsidiary on the acquisition date

Common Stock                                          90,000

APIC                                                           1,20,000

Retained earnings                                     7,30,000                   $9,40,000    

Fair value in excess of book value                                               $6,00,000

Excess fair value allocated to:

undervalued building                                                           $1,00,000

unrecorded patent                                                                  $2,00,000

Goodwill                                                                                  $3,00,000

Balance                                                                                                 $0

Consolidation entries  and Consolidation Spreadsheet on the acquisition date are being embedded in the word document attached below due to vast columns of table sets that this answering box cannot contain.

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