P company purchased 25 of s companys common stock on

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Reference no: EM13600575

The following balances were taken from the records of S Company:

Common stock (1/1/11 and 12/31/11) $720,000
Retained earnings 1/1/11 $160,000
Net income for 2011 180,000
Dividends declared in 2011 (40,000)
Retained earnings, 12/31/11 300,000
Total stockholders' equity on 12/31/11 $1,020,000

P Company purchased 25% of S Company's common stock on January 1, 2011 for $300,000 for cash. The difference between implied value and book value is attributable to fixed assets with a remaining useful life on January 1, 2011 of ten years.

P can exert significant influence over S.

Required:

A. What is the journal entry to record the purchase of S Company?

B. What is the differential on the transaction?

C. What journal entries will P record for S's activity in 2011

Reference no: EM13600575

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