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    Consolidation - Journal Entries

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    P2-1 Consolidation
    Phillips Solina
    Current Assets $180,000.00 $85,000.00
    Plant & equipment (net) $450,000.00 $140,000.00
    Total Assets $630,000.00 $225,000.00

    Total Liabilities $95,000 $35,000
    Common Stock, $10 par value 350,000 160,000
    Other contributed capital 125,000 53,000
    Retained earnings (deficit) 60,000 -23,000

    Total liabilities & equities $630,000 $225,000

    On January 1, 2007, the stockholders of Phillips and Solina agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquirer, it was agreed that Phillips was acquiring Solina. Phillips agreed to issue 20,000 shares of its $10 par stock to acquire all the net assets of Solina at a time when the fair
    value ot Phillips' cpmmon stock was $15 per share.

    On the date of consolidation, the fair values of Solina's current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $150,000.
    Phillips will incur $20,000 of dirct acquisition costs and $6,000 in stock issue costs.

    Prepare the journal entries on the books of Phillips to record the acquisition.

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    https://brainmass.com/business/journal-entries/421490

    Solution Summary

    The solution prepares the journal entries on the books of Phillips to record the acquisition.

    $2.19

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