Mason Corporation acquired 100 percent ownership of Best Company on February 12,
ID: 2500837 • Letter: M
Question
Mason Corporation acquired 100 percent ownership of Best Company on February 12, 20X9. At the date of acquisition, Best Company reported assets and liabilities with book values of $422,000 and $171,000, respectively, common stock outstanding of $99,000, and retained earnings of $152,000. The book values and fair values of Best’s assets and liabilities were identical except for land, which had increased in value by $22,000, and inventories, which had decreased by $6,000. Required: a. Prepare the following consolidation entries required to prepare a consolidated balance sheet immediately after the business combination assuming Mason acquired its ownership of Best for $276,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) b. Prepare the following consolidation entries required to prepare a consolidated balance sheet immediately after the business combination assuming Mason acquired its ownership of Best for $247,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Explanation / Answer
A./ ACQUAIRED THE OWNERSHIP OF BEST FOR $276000
1/ FOR PURCHASE CONSIDERATION DUE.
BUSINESS PURCHASE A/C..........................DR $276000
TO LIQUIDATOR OF BEST $276000
2./ ACQUISITION OF ASSET, LIBALITY & RESERVE
SUNDRY ASSET A/C..................................DR $422000
PROFIT/ LOSS A/C.....................................DR $25000
TO LIBALITY A/C $171000
TO BUSINESS PURCHASE A/C $276000
3./ PAYMENT OF PURCHASE CONSIDERATION
LIQUIDATOR OF BESTA/C..............................DR $276000
TO CASH A/C $276000
B./ ACQUAIRED THE OWNERSHIP OF BEST FOR $247000
1/ FOR PURCHASE CONSIDERATION DUE.
BUSINESS PURCHASE A/C..........................DR $247000
TO LIQUIDATOR OF BEST $247000
2./ ACQUISITION OF ASSET, LIBALITY & RESERVE
SUNDRY ASSET A/C..................................DR $422000
TO LIBALITY A/C $171000
TO RETAINED EARNINGS A/C $4000
TO BUSINESS PURCHASE A/C $247000
3./ PAYMENT OF PURCHASE CONSIDERATION
LIQUIDATOR OF BESTA/C..............................DR $247000
TO CASH A/C $247000