Porter Company purchased an 90% interest in the capital stock of Salem Company

Question # 00003384 Posted By: neil2103 Updated on: 11/10/2013 11:35 PM Due on: 11/27/2013
Subject Accounting Topic Accounting Tutorials:
Question
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On January 1, 2011, Porter Company purchased an 90% interest in the capital stock of Salem Company for $850,000.
The fair value of the noncontrolling interest was proportionate to the consideration paid by the controlling interest.


At that time, Salem Company had capital stock of $550,000 and retained earnings of $80,000.



Differences between the fair value and the book value of the identifiable assets of Salem Company were as follows:


















Under (Over) Valued







Equipment
120,000








Land

25,000








Inventory

40,000








In-Process Research & Development 40,000








Bonds payable
-10,000





















The book values of all other assets and liabilities of Salem Company were equal to their fair values on January 1, 20011

The inventory was sold in 2011 and the equipment has a 5-year remaining life as of January 1, 2011.



The bonds payable mature in 5 years from January 1, 2011







At 12/31/13, Salem owes Porter $25000





















Required for the year ended December 31, 2013:





















1. Prepare the analysis as of acquisition date including unamortized differential at 1/1/11.



2. Prepare the journal entries Porter recorded with respect to its investment in Porter for the year ended 12/31/13.

















Use formulas in all calculations.






















Clearly label each part in the spreadsheet tab below




















Do problem on "Additional Question" below for 20 points.




















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Tutorials for this Question
  1. Tutorial # 00003195 Posted By: neil2103 Posted on: 11/10/2013 11:39 PM
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