The stockholders' equity of Sidding Company on September 30, 2006, the end of a fiscal year, was as follows:
Sidding had no cumulative preferred dividends in arrears. The current fair values of Sidding's identifiable net assets equaled their carrying amounts on September 30, 2006.
On October 1, 2006, Preen Corporation paid $1,400,000 for 70,000 shares of Sidding's outstanding preferred stock and 80,000 shares of Sidding's outstanding common stock. Out-of-pocket costs of the business combination may be disregarded.
a. Prepare a journal entry on October 1, 2006, to record Preen Corporation's business combination with Sidding Company. Omit explanation and disregard income taxes.
b. Prepare a working paper elimination (in journal entry format) for Preen Corporation and subsidiary on October 1, 2006. Omit explanation and disregard income taxes.

Question

The stockholders' equity of Sidding Company on September 30, 2006, the end of a fiscal year, was as follows:
  Sidding had no cumulative preferred dividends in arrears. The current fair values of Sidding's identifiable net assets equaled their carrying amounts on September 30, 2006.
On October 1, 2006, Preen Corporation paid $1,400,000 for 70,000 shares of Sidding's outstanding preferred stock and 80,000 shares of Sidding's outstanding common stock. Out-of-pocket costs of the business combination may be disregarded.
a. Prepare a journal entry on October 1, 2006, to record Preen Corporation's business combination with Sidding Company. Omit explanation and disregard income taxes.
b. Prepare a working paper elimination (in journal entry format) for Preen Corporation and subsidiary on October 1, 2006. Omit explanation and disregard income taxes.

Quizplus · Accepted Answer

The Answer of The stockholders' equity of Sidding Company on September 30, 2006, the end of a fiscal year, was as follows:
  Sidding had no cumulative preferred dividends in arrears. The current fair values of Sidding's identifiable net assets equaled their carrying amounts on September 30, 2006.
On October 1, 2006, Preen Corporation paid $1,400,000 for 70,000 shares of Sidding's outstanding preferred stock and 80,000 shares of Sidding's outstanding common stock. Out-of-pocket costs of the business combination may be disregarded.
a. Prepare a journal entry on October 1, 2006, to record Preen Corporation's business combination with Sidding Company. Omit explanation and disregard income taxes.
b. Prepare a working paper elimination (in journal entry format) for Preen Corporation and subsidiary on October 1, 2006. Omit explanation and disregard income taxes.

The Stockholders' Equity of Sidding Company on September 30, 2006