On December 31,2011,Potter Corporation has the following stockholders' equity:
On January 1,2012,Potter Corporation declared and issued a 10% stock dividend when the market price per share was $50.
On January 2,2012,Corrao Corporation purchased an 80% interest in Potter Corporation for $250,000 on the open market.On January 2,2012,the fair value of Potter's individual assets and liabilities was equal to book value.Any excess cost over book value is attributed to goodwill.
Required:
1.Prepare the journal entry(ies)for Potter Corporation on January 1,2012.
2.Prepare the journal entry(ies)for Corrao Corporation on January 2,2012.
3.Prepare the elimination entry(ies)for consolidating work papers on January 2,2012.
4.Prepare the elimination entry(ies)for consolidating work papers on January 2,2012 if the 10% stock dividend is not declared and issued on January 1,2012.

Question

On December 31,2011,Potter Corporation has the following stockholders' equity:
  On January 1,2012,Potter Corporation declared and issued a 10% stock dividend when the market price per share was $50.
On January 2,2012,Corrao Corporation purchased an 80% interest in Potter Corporation for $250,000 on the open market.On January 2,2012,the fair value of Potter's individual assets and liabilities was equal to book value.Any excess cost over book value is attributed to goodwill.
Required:
1.Prepare the journal entry(ies)for Potter Corporation on January 1,2012.
2.Prepare the journal entry(ies)for Corrao Corporation on January 2,2012.
3.Prepare the elimination entry(ies)for consolidating work papers on January 2,2012.
4.Prepare the elimination entry(ies)for consolidating work papers on January 2,2012 if the 10% stock dividend is not declared and issued on January 1,2012.

Quizplus · Accepted Answer

The Answer of On December 31,2011,Potter Corporation has the following stockholders' equity:
  On January 1,2012,Potter Corporation declared and issued a 10% stock dividend when the market price per share was $50.
On January 2,2012,Corrao Corporation purchased an 80% interest in Potter Corporation for $250,000 on the open market.On January 2,2012,the fair value of Potter's individual assets and liabilities was equal to book value.Any excess cost over book value is attributed to goodwill.
Required:
1.Prepare the journal entry(ies)for Potter Corporation on January 1,2012.
2.Prepare the journal entry(ies)for Corrao Corporation on January 2,2012.
3.Prepare the elimination entry(ies)for consolidating work papers on January 2,2012.
4.Prepare the elimination entry(ies)for consolidating work papers on January 2,2012 if the 10% stock dividend is not declared and issued on January 1,2012.

On December 31,2011,Potter Corporation Has the Following Stockholders' Equity