Masterson company acquires

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Reference no: EM13922843

Masterson Company acquires a 80% interest in its subsidiary for a purchase price of $620,800. The excess of the purchase price over the book value of the subsidiary's Stockholders' Equity is allocated to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an unrecorded Patent that the parent valued at $100,000, and Goodwill of $150,000, 80% of which is allocated to the parent.

The parent and the subsidiary report the following balance sheets on the acquisition date:

	Masterson	Subsidiary		Masterson	Subsidiary

Cash	mce_markernbsp; 920,753	$107,576	Current Liabilities	mce_markernbsp; 814,779	$165,648
Accounts receivable	725,760	165,648	Long-term Liabilities	3,379,200	238,000
Inventory	1,099,980	212,772	Common Stock	927,045	47,600
Equity Investment	620,800		APIC	688,905	59,500
PPE, net	5,291,244	393,652	Retained Earnings	2,848,608	368,900
	$8,658,537	$879,648		$8,658,537	$879,648

Prepare the consolidation journal entries on the acquisition date.

Reference no: EM13922843

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