Prepare the journal entries on Set Corporation’s books to push down the values reflected in the…


Question Description:

33

Journal entries for push-down accounting On January 1, 2011, Pin Corporation acquired a 90 percent interest in Set Corporation for $2,520,000. The book values and fair values of Set’s assets and equities on this date are as follows (in thousands): Book Value Fair Value Cash $ 200 $ 200 Accounts receivable—net 300 300 Inventories 500 600 Land 300 800 Buildings—net 700 1,000 Equipment—net 800 600 $2,800 $3,500 Accounts payable $ 550 $ 550 Other liabilities 450 550 Capital stock 1,000 Retained earnings 800 $2,800 REQUIRED 1. Prepare the journal entries on Set Corporation’s books to push down the values reflected in the acquisition price under parent-company theory. 2. Prepare the journal entries on Set Corporation’s books to push down the values reflected in the acquisition price under entity theory.

Answer

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