Pounce Corporation acquired all of the stock of Stubey Company, at an acquisition cost of $500 million. Stubey's book value at the time was $75 million. Stubey's current assets and current liabilities were carried at amounts approximating fair value. However, its plant assets were overvalued by $100 million. Stubey also has previously unreported customer lists valued at $60 million.
Required
Prepare consolidation eliminating entries (E) and (R) at the date of acquisition.

Question

Quizplus · Accepted Answer

The Answer of Pounce Corporation acquired all of the stock of Stubey Company, at an acquisition cost of $500 million. Stubey's book value at the time was $75 million. Stubey's current assets and current liabilities were carried at amounts approximating fair value. However, its plant assets were overvalued by $100 million. Stubey also has previously unreported customer lists valued at $60 million.
Required
Prepare consolidation eliminating entries (E) and (R) at the date of acquisition.

Pounce Corporation Acquired All of the Stock of Stubey Company