Solution-Prepare a consolidated balance sheet for Pipe

Prepare a consolidated balance sheet for Pipe Corporation

Reference no: EM133068660

Question - On July 1, 2014, Pipe Corporation issued 23,000 shares of its own $2 par value common stock for 40,000 shares of the outstanding stock of Sector Inc. in an acquisition. Pipe common stock at July 1, 2014 was selling at $16 per share. Just before the business combination, balance sheet information of the two corporations was as follows:

	Pipe Book Value	Sector Book Value	Sector Fair Value
Cash	$25,000	$17,000	$17,000
Inventories	55,000	42,000	47,000
Other current assets	110,000	40,000	30,000
Land	100,000	45,000	35,000
Plant and equipment-net	660,000	220,000	280,000
	$950,000	$364,000	$409,000
Liabilities	$220,000	$70,000	$75,000
Capital stock, $2 par value	500,000	100,000
Additional paid-in capital	170,000	90,000
Retained earnings	60,000	104,000
	$950,000	$364,000

Required -

1. Prepare the journal entry on Pipe Corporation's books to account for the investment in Sector Inc.

2. Prepare a consolidated balance sheet for Pipe Corporation and Subsidiary immediately after the business combination.

Reference no: EM133068660

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Prepare a consolidated balance sheet for Pipe Corporation

Reference no: EM133068660

Reference no: EM133068660

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