11 on january 1 2011 penny company acquired a 90 interest in lampire company for 180 4307504

11 on january 1 2011 penny company acquired a 90 interest in lampire company for 180 4307504

11) On January 1, 2011, Penny Company acquired a 90% interest in Lampire Company for $180,000 cash. On January 1, 2011, Lampire Company had the following assets and liabilities:

Book ValueFair Value

Cash$10,000$10,000

Accounts Receivable30,00035,000

Inventory40,00050,000

Plant Assets60,00080,000

Total Assets$140,000$175,000

Liabilities$25,000$25,000

Capital Stock100,000

Retained Earnings15,000

Total Liabilities &

Stockholders' Equity$140,000

Push-down accounting is used for the acquisition.

Required:

1. Assume both companies use the entity theory. Record the push-down adjustment on Lampire's separate books on January 1, 2011.

2. Assume both companies use the parent company theory. Record the push-down adjustment on Lampire's separate books on January 1, 2011.

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