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accounting question, Wondering if I did this right or not
For Example (this is a question I have to answer)
On the last day of the year,Johns Company purchased 90% of the common stock of Smith,inc. for $5,000,000. At that time,Smith,Inc.reported the following on its balance sheet; assets $7,400,000;Liabilities,$1,300,000; common stock, $10 par,$5,000,000;retrained earnings,$1,100,000. In negotiation the stock sale,it was determined that the book carrying amounts of Smith's records assets and equities approximated their current market values. At the ate of acquisition,the amount to be reported on the consolidated balance sheet for minority interest is A) 110,000 C) 610,000 B) 500,000 D) 640,000 My answer to this is C) 610,000 I am only wanting to know if I did this right or used the incorret method At the date of acquisition,the amount to be reported on the consolidated balance sheet for excess of acquisition cost over book value of acquired subsidiary is A) 0 B) 490,000 C) 670,000 D) 760,000 I figured 490,000 This is a very complex accounting procedure to me Thank you in advance |
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Your answer of $610,000 is correct. On the second question, I know why you think it is $490,000. Think about this. They are looking for the excess of acquisition cost over book value. What is the book value? What was the acquisition price? Is there an excess? |
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