Solution-Prepare a computation and allocation of difference

Prepare a computation and allocation of difference schedule

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Reference no: EM131736866

Problem - The two following separate cases show the financial position of a parent company and its subsidiary company on November 30, 2014, just after the parent had purchased 90% of the subsidiary's stock:

	Case I		Case II
	P Company	S Company	P Company	S Company
Current assets	$ 874,700	$257,900	$ 784,500	$278,000
Investment in S Company	188,400		188,400
Long-term assets	1,390,700	400,500	1,204,900	400,500
Other assets	90,700	40,300	69,500	69,800
Total	$2,544,500	$698,700	$2,247,300	$748,300
Current liabilities	$ 636,400	$269,000	$ 707,000	$259,700
Long-term liabilities	856,900	287,100	916,200	270,200
Common stock	595,300	178,700	595,300	178,700
Retained earnings	455,900	(36,100 )	28,800	39,700
Total	$2,544,500	$698,700	$2,247,300	$748,300

Assume that Company S's balance sheet is the same as the balance sheet used in Case I (from part a). Suppose that there were 50,000 shares of S Company common stock outstanding and that Company P acquired 90% of the shares for $4.50 a share. Shortly after acquisition, the non-controlling shares were selling for $4.25 a share. Prepare a computation and allocation of difference schedule considering this information.

Reference no: EM131736866

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Prepare a computation and allocation of difference schedule

Reference no: EM131736866

Reference no: EM131736866

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