Reference no: EM133109003
Question - On January 1, 2021, Peterson Corporation paid $100,000 cash for 10% of the outstanding common stock of Sohn Company. On December 31, 2021, Peterson paid $576,000 cash for 60% of the outstanding common stock of Sohn.
The following information about Sohn Company on January 1, 2021 was available:
|
Book value
|
Fair value
|
|
Cash
|
321,000
|
321,000
|
|
Equipment
|
532,000
|
537,000
|
|
Total
|
853,000
|
858,000
|
|
Accounts Payable
|
3,000
|
3,000
|
|
Long-term debt
|
100,000
|
92,000
|
|
Common Stock
|
50,000
|
|
|
Retained Earnings
|
700,000
|
|
|
Total
|
853,000
|
|
The fair values of Peterson's 10% investment in Sohn and of the noncontrolling interest were $96,000 and $288,000 respectively on December 31, 2021. There was no control premium.
Required -
(i) Prepare the journal entries for Peterson Corporation on December 31, 2021.
(ii) Prepare the working paper entries E and R (in journal entry format) for Peterson Corporation and subsidiary on December 31, 2021.