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How much of the debt shows up on balance sheet

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CBS Company and Sam Inc. form a joint venture-CBS and Sam Partners-to manufacture and distribute agricultural pesticides. CBS and Sam each contribute $20 million cash and receive 50% of CBS's common stock.

CBS then borrows $200 million from a consortium of banks and uses the money to build its manufacturing and distribution facilities. The loan is made on December 31, 2011, and is fully guaranteed by both CBS and Sam.

1. How much of the $200 million debt shows up on the December 31, 2011, balance sheet of 2. CBS Company? Why? Would the same be true for Sam Inc.? Why or why not?

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In the given assignment we were required to explain the presentation of the transaction asked in the problem. The solution was provided based on presentation of financial statements as per schedule III.

Reference no: EM132275309

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