Master Corporation acquired 80 percent ownership of Stanley Wood Products Compan
ID: 2450582 • Letter: M
Question
Master Corporation acquired 80 percent ownership of Stanley Wood Products Company on January 1, 20X1, for $146,000. On that date, the fair value of the noncontrolling interest was $36,500, and Stanley reported retained earnings of $43,000 and had $93,000 of common stock outstanding. Master has used the equity method in accounting for its investment in Stanley.
Trial balance data for the two companies on December 31, 20X5, are as follows:
1. On the date of combination, the fair value of Stanley’s depreciable assets was $46,500 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written off over the following 10-year period.
2. There was $12,000 of intercorporate receivables and payables at the end of 20X5.
b.
Prepare all consolidation entries needed to prepare consolidated statements for 20X5. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. Record basic consolidation entry.
2. Record the amortized excess value reclassification entry.
3. Record the excess value (differential) reclassification entry.
4. Record the entry to eliminate the intercompany accounts.
Master Corporation acquired 80 percent ownership of Stanley Wood Products Company on January 1, 20X1, for $146,000. On that date, the fair value of the noncontrolling interest was $36,500, and Stanley reported retained earnings of $43,000 and had $93,000 of common stock outstanding. Master has used the equity method in accounting for its investment in Stanley.