On January 1,2011,Jeff Company acquired a 90% interest in Margaret Company for $198,000 cash.On January 1,2011,Margaret Company had the following assets and liabilities:
Push-down accounting is used for the acquisition.
Required:
1.Assume both companies use the entity theory.
a.Record the journal entry on Margaret's separate books on January 1,2011.
b.Record the journal entry on Jeff's separate books on January 1,2011.
2.Assume both companies use the parent company theory.
a.Record the journal entry on Margaret's separate books on January 1,2011.
b.Record the journal entry on Jeff's separate books on January 1,2011.

Question

On January 1,2011,Jeff Company acquired a 90% interest in Margaret Company for $198,000 cash.On January 1,2011,Margaret Company had the following assets and liabilities:
  Push-down accounting is used for the acquisition.
Required:
1.Assume both companies use the entity theory.
a.Record the journal entry on Margaret's separate books on January 1,2011.
b.Record the journal entry on Jeff's separate books on January 1,2011.
2.Assume both companies use the parent company theory.
a.Record the journal entry on Margaret's separate books on January 1,2011.
b.Record the journal entry on Jeff's separate books on January 1,2011.

Quizplus · Accepted Answer

The Answer of On January 1,2011,Jeff Company acquired a 90% interest in Margaret Company for $198,000 cash.On January 1,2011,Margaret Company had the following assets and liabilities:
  Push-down accounting is used for the acquisition.
Required:
1.Assume both companies use the entity theory.
a.Record the journal entry on Margaret's separate books on January 1,2011.
b.Record the journal entry on Jeff's separate books on January 1,2011.
2.Assume both companies use the parent company theory.
a.Record the journal entry on Margaret's separate books on January 1,2011.
b.Record the journal entry on Jeff's separate books on January 1,2011.

On January 1,2011,Jeff Company Acquired a 90% Interest in Margaret