P acquired 100% of S's outstanding common stock on 1/1/06 for $400,000. Selected information for S as of 1/1/06 follows:
Capital stock $ 50,000
Retained earnings 250,000
Inventory 60,000 50,000
Land 170,000 200,000
(a)Net of accum depr of $300,000.
Assume P elected to use non-push-down accounting.
a.Prepare the entry to record the combination.
b.Prepare an analysis of the investment account by components.
c.Prepare all consolidation entries as of 1/1/06.
(a) Non-push-down accounting means that we don't touch subsidiary's books and make adjustments to the fair value and record Goodwill.
The solution answers the question(s) below.