Reference no: EM132460242

­­­­Post Corporation paid $330,000 cash for 75% of the outstanding common stock of Soft Company on January 1, 2020. There was no control premium and the fair value of the noncontrolling interest was $110,000 on January 1, 2020. Differences between book value and fair value of the net identifiable assets of Soft Company on January 1, 2020, were limited to the following:

                                              Book value                                        Fair value

Inventories                               $ 25,000                                             $ 35,000

Building (net)                              175,000                                             173,000

Required:

Problem (i) Prepare the working paper elimination entries E and R (in journal entry format) for Post Corporation and subsidiary on January 1, 2020.

Problem (ii) Complete the following working paper:

• Working paper for consolidated balance sheet on date of business combination, January 1, 2020

                                       Post Soft Adjustments & Eliminations Consolidated

Dr (Cr) Dr (Cr)                            Debits Credits Dr (Cr)

Cash                                           20,00030,000

Inventories                                 170,00025,000

Investment in Soft                          330,000

Building (net)                           230,000175,000

Accounts payable                    -120,000-110,000

Common stock                         -380,000-25,000

Add. paid-in capital                 -100,000-30,000

Retained earnings                     -150,000-65,000

Total                                                  00