Pascal Corporation purchased 90% of the stock of Salzer Company for $2,058,570 o
ID: 2525203 • Letter: P
Question
Pascal Corporation purchased 90% of the stock of Salzer Company for $2,058,570 on January 1, 2015. On this date, the fair value of the assets and liabilities of Salzer Company was equal to their book value except for the inventory and equipment accounts. The inventory had a fair value of $719,900 and a book value of $601,100. The equipment had a book value of $897,100 and a fair value of $1,068,000.
The balances in Salzer Company’s common stock and retained earnings accounts on the date of acquisition were $1,191,600 and $605,900, respectively.
In general journal form, prepare the entry on Salzer Company’s books to record the effect of the pushed down values implied by the purchase of its stock by Pascal Company assuming that values are allocated on the basis of the fair value of Salzer Company as a whole imputed from the transaction. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Account Titles and Explanation
Debit
Credit
Explanation / Answer
Parent Share Minority Share 100% Total Value Purchase price and implied value $ 2,058,570.00 $ 228,730.00 $ 2,287,300.00 Book Value of Equity Acquired Common Stock $ 1,072,440.00 $ 119,160.00 $ 1,191,600.00 Retained Earnigs $ 545,310.00 $ 60,590.00 $ 605,900.00 Total Book Value $ 1,617,750.00 $ 179,750.00 $ 1,797,500.00 Difference between implied value and book value=($2058570-$1617750) for Parent Share,($228730-$179750) for Minority Share $ 440,820.00 $ 48,980.00 $ 489,800.00 Inventory $ (106,920.00) $ (11,880.00) $ (118,800.00) Equipment $ (153,810.00) $ (17,090.00) $ (170,900.00) Balance $ 180,090.00 $ 20,010.00 $ 200,100.00 Record new goodwill $ (180,090.00) $ (20,010.00) $ (200,100.00) Balance $ - $ - $ - General,Journal Account Titles and Explaination Debit Credit Common Stock $ 1,191,600.00 Retained Earnings $ 605,900.00 Differnce between Implied value and book value $ 489,800.00 To Investment in Salzer Company $ 2,058,570.00 To Non Controlling Interest in Equity $ 228,730.00 Inventory $ 118,800.00 Equipment $ 170,900.00 Goodwill $ 200,100.00 To Difference between Implied and Book Value $ 489,800.00 Minority Interest Minority Share=($2058570*10/90) $ 228,730.00 Book Value Fair Value Difference Inventory $ 601,100.00 $ 719,900.00 $ 118,800.00 Equipment $ 897,100.00 $ 1,068,000.00 $ 170,900.00