On 5/1/06, Pozco acquired 75% of Sozco's outstanding common stock for $550,000 cash. (On 4/30/06, Sozco's assets and liabilities had book values of $2,000,000 and $1,560,000 respectively.) A conceptual analysis of the Invest-ment account as of 5/1/06 under the parent company concept follows:
Required:
a. Determine the amounts at which the land and goodwill would be reported in the consolidated financial statements under the parent company concept.
b. Determine the amounts at which the land and goodwill would be reported in the consolidated financial statements under the economic unit concept.
c. Determine the dollar amount differences between the noncontrolling interest reported in the balance sheet under the parent company concept versus under the economic unit concept.

Question

On 5/1/06, Pozco acquired 75% of Sozco's outstanding common stock for $550,000 cash. (On 4/30/06, Sozco's assets and liabilities had book values of $2,000,000 and $1,560,000 respectively.) A conceptual analysis of the Invest-ment account as of 5/1/06 under the parent company concept follows:
Required:
  a. Determine the amounts at which the land and goodwill would be reported in the consolidated financial statements under the parent company concept.
b. Determine the amounts at which the land and goodwill would be reported in the consolidated financial statements under the economic unit concept.
c. Determine the dollar amount differences between the noncontrolling interest reported in the balance sheet under the parent company concept versus under the economic unit concept.

Quizplus · Accepted Answer

The Answer of On 5/1/06, Pozco acquired 75% of Sozco's outstanding common stock for $550,000 cash. (On 4/30/06, Sozco's assets and liabilities had book values of $2,000,000 and $1,560,000 respectively.) A conceptual analysis of the Invest-ment account as of 5/1/06 under the parent company concept follows:
Required:
  a. Determine the amounts at which the land and goodwill would be reported in the consolidated financial statements under the parent company concept.
b. Determine the amounts at which the land and goodwill would be reported in the consolidated financial statements under the economic unit concept.
c. Determine the dollar amount differences between the noncontrolling interest reported in the balance sheet under the parent company concept versus under the economic unit concept.

On 5/1/06, Pozco Acquired 75% of Sozco's Outstanding Common Stock