Elway Company acquired 80 percent of the outstanding stock of Warner Company for $152 cash.(No goodwill is associated with the acquisition.)Elway Company's assets prior to the acquisition were $700.Warner Company's assets prior to the acquisition were $400.What are the total assets on the consolidated balance sheet prepared immediately after the acquisition of Warner Company's stock? (Assume elimination entries are completed.)
A)$400
B)$700
C)$948
D)$1,100

Question

Quizplus · Accepted Answer

To prepare the consolidated balance sheet, we need to eliminate the investment in Warner Company and the equity of Warner Company from the assets and liabilities section of Elway Company's balance sheet.

The total assets on the consolidated balance sheet after the elimination entries would be $1,100:

Elway Company's assets (before elimination): $700 
Warner Company's assets: $400 
Investment in Warner Company (80% of $400): -$320 
Elimination of Warner Company's equity: -$20

Total assets on consolidated balance sheet: $700 + $400 - $320 - $20 = $1,100

Elway Company Acquired 80 Percent of the Outstanding Stock of Warner