On January 1, 2014, Parry Incorporated paid $72,000 cash for 80% of Samuel Company's common stock. At that time Samuel had $40,000 capital stock and $30,000 retained earnings. The book values of Samuel's assets and liabilities were equal to fair values,
and any excess amount is allocated to goodwill. Samuel reported net income of $18,000 during 2014 and declared $5,000 of dividends on December 31, 2014. At the time the dividends were declared, Parry recorded a receivable for the amount they expected to receive the following month. A summary of the balance sheets of Parry and Samuel are shown below.
Required:
Complete the consolidated balance sheet working papers for Parry Corporation and Subsidiary at December 31, 2014.
What will be an ideal response?
Preliminary computations
Initial investment for 80% ownership of Samuel: $72,000
Implied fair value of Samuel ($72,000 / 80%) 90,000
Book Value of Samuel (70,000)
Amount allocated to Goodwill $20,000
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