On 6/1/06, Phota acquired 90% of Shota's outstanding common stock for $727,000 cash. The net assets of Shota have a book value of $700,000 and a current value of $780,000. The entire $80,000 difference between the book value and the current value of the net assets relates to a parcel of land that has a book value of $400,000.
Required:
a. Prepare an analysis of the Investment account as of the acquisition date by major conceptual elements.
b. Determine the amount at which the land would be reported in the consolidated financial statements under the parent company concept.
c. Repeat requirement b using the economic unit concept.

Question

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The Answer of On 6/1/06, Phota acquired 90% of Shota's outstanding common stock for $727,000 cash. The net assets of Shota have a book value of $700,000 and a current value of $780,000. The entire $80,000 difference between the book value and the current value of the net assets relates to a parcel of land that has a book value of $400,000.
Required:
a. Prepare an analysis of the Investment account as of the acquisition date by major conceptual elements.
b. Determine the amount at which the land would be reported in the consolidated financial statements under the parent company concept.
c. Repeat requirement b using the economic unit concept.

On 6/1/06, Phota Acquired 90% of Shota's Outstanding Common Stock