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  • Consolidation After One Year of Ownership: Required

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    Levi Storm
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    Pioneer Corporation purchased 80% of Lowe Corporation's stock for $190,000 on January 1, 20X2. Lowe had retained earnings of $80,000, buildings were undervalued by $32,000 on its books, and the noncontrolling interest was valued at $47,500. In 20X2, Lowe reported net income of $40,000 with no dividends declared.

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    acct e5-13

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    E5

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    Pioneer Corporation purchased 80% of Lowe Corporation's stock for $190,000 on January 1, 20X2. Lowe had retained earnings of $80,000, buildings were undervalued by $32,000 on its books, and the noncontrolling interest was valued at $47,500. In 20X2, Lowe reported net income of $40,000 with no dividends declared.

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    140 views1 page

    Consolidation After One Year of Ownership: Required

    Uploaded by

    Levi Storm
    Pioneer Corporation purchased 80% of Lowe Corporation's stock for $190,000 on January 1, 20X2. Lowe had retained earnings of $80,000, buildings were undervalued by $32,000 on its books, and the noncontrolling interest was valued at $47,500. In 20X2, Lowe reported net income of $40,000 with no dividends declared.

    Copyright:

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    Download as DOC, PDF, TXT or read online from Scribd
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    E5-13

    Consolidation after One Year of Ownership


    Pioneer Corporation purchased 80 percent of Lowe Corporations stock on January 1, 20X2. At that date Lowe reported retained earnings of $80,000 and had $120,000 of stock outstanding. The fair value of its buildings was $32,000 more than the book value. Pioneer paid $190,000 to acquire the Lowe shares. At that date, the noncontrolling interest had a fair value of $47,500. The remaining economic life for all Lowes depreciable assets was eight years on the date of combination. The amount of the differential assigned to goodwill is not impaired. Lowe reported net income of $40,000 in 20X2 and declared no dividends.

    Required
    a. Give the eliminating entries needed to prepare a consolidated balance sheet immediately after Pioneer purchased Lowe stock.

    b. Give all eliminating entries needed to prepare a full set of consolidated financial statements for 20X2.

    P5-32

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