Savy Corporation's stockholders' equity on December 31,2010 was as follows:
8% cumulative preferred stock,$100 par value,
callable at $109,with two years of dividends
On January 1,2011,Paul Corporation purchased a 70% interest in Savy's common stock for $2,100,000.On this date the book values of Savy's assets and liabilities are equal to their fair values.
Required:
1.Determine the book value of the common stockholders' equity for Savy Corporation on January 1,2011.
2.What is the amount of goodwill reported on the consolidated balance sheet for Paul Corporation and Subsidiary at January 2,2011?
3.On January 2,2011,Paul purchased 70% of Savy's preferred stock for $50,000.Prepare the journal entry(ies)for Paul for this purchase on January 2,2011.
4.Prepare the elimination entry on the consolidating work papers for the Investment in Savy,Preferred Stock and Savy's Preferred Stock on January 2,2011.

Question

Savy Corporation's stockholders' equity on December 31,2010 was as follows:
8% cumulative preferred stock,$100 par value,
callable at $109,with two years of dividends
  On January 1,2011,Paul Corporation purchased a 70% interest in Savy's common stock for $2,100,000.On this date the book values of Savy's assets and liabilities are equal to their fair values.
Required:
1.Determine the book value of the common stockholders' equity for Savy Corporation on January 1,2011.
2.What is the amount of goodwill reported on the consolidated balance sheet for Paul Corporation and Subsidiary at January 2,2011?
3.On January 2,2011,Paul purchased 70% of Savy's preferred stock for $50,000.Prepare the journal entry(ies)for Paul for this purchase on January 2,2011.
4.Prepare the elimination entry on the consolidating work papers for the Investment in Savy,Preferred Stock and Savy's Preferred Stock on January 2,2011.

Quizplus · Accepted Answer

The Answer of Savy Corporation's stockholders' equity on December 31,2010 was as follows:
8% cumulative preferred stock,$100 par value,
callable at $109,with two years of dividends
  On January 1,2011,Paul Corporation purchased a 70% interest in Savy's common stock for $2,100,000.On this date the book values of Savy's assets and liabilities are equal to their fair values.
Required:
1.Determine the book value of the common stockholders' equity for Savy Corporation on January 1,2011.
2.What is the amount of goodwill reported on the consolidated balance sheet for Paul Corporation and Subsidiary at January 2,2011?
3.On January 2,2011,Paul purchased 70% of Savy's preferred stock for $50,000.Prepare the journal entry(ies)for Paul for this purchase on January 2,2011.
4.Prepare the elimination entry on the consolidating work papers for the Investment in Savy,Preferred Stock and Savy's Preferred Stock on January 2,2011.

Savy Corporation's Stockholders' Equity on December 31,2010 Was as Follows