Pascal Corporation purchased 90% of the stock of Salzer Company for $2,051,910 o
ID: 2528316 • Letter: P
Question
Pascal Corporation purchased 90% of the stock of Salzer Company for $2,051,910 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 $737,800 and a book value of $592,300. The equipment had a book value of $892,900 and a fair value of $1,057,600.
The balances in Salzer Company’s common stock and retained earnings accounts on the date of acquisition were $1,188,200 and $601,400, 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
Accounts title & explantion Dr Cr Inventory (737800-592300) $145,500 Equipment (1057600-892900) 164700 Goodwill $490,300 Retained Earnings $601,400 Push Down Capital $1,401,900 (to record the effect of push down values working Goodwill 441270/.9 490300 Purcahse price $2,051,910 Less:Book value 90%*(1188200+601400) 1610640 $441,270