On December 31, 2013, Maria Corporation has the following stockholders' equity:
On January 1, 2014, Maria Corporation declared and issued a 10% stock dividend when the market price per share was $50.
On January 2, 2014, James Corporation purchased an 80% interest in Maria Corporation for $160,000 from the open market. On January 2, 2014, the fair value of Maria's individual assets and liabilities was equal to book value.
Required:
1. Prepare the journal entry(ies) for Maria Corporation on January 1, 2014.
2. Prepare the journal entry(ies) for James Corporation on January 2, 2014.
3. Prepare the elimination entry(ies) for consolidating work papers on January 2, 2014.
4. Prepare the elimination entry(ies) for consolidating work papers on January 2, 2014 if the 10% stock dividend is not declared and issued on January 1, 2014.

Question

On December 31, 2013, Maria Corporation has the following stockholders' equity:
  On January 1, 2014, Maria Corporation declared and issued a 10% stock dividend when the market price per share was $50.
On January 2, 2014, James Corporation purchased an 80% interest in Maria Corporation for $160,000 from the open market. On January 2, 2014, the fair value of Maria's individual assets and liabilities was equal to book value.
Required:
1. Prepare the journal entry(ies) for Maria Corporation on January 1, 2014.
2. Prepare the journal entry(ies) for James Corporation on January 2, 2014.
3. Prepare the elimination entry(ies) for consolidating work papers on January 2, 2014.
4. Prepare the elimination entry(ies) for consolidating work papers on January 2, 2014 if the 10% stock dividend is not declared and issued on January 1, 2014.

Quizplus · Accepted Answer

The Answer of On December 31, 2013, Maria Corporation has the following stockholders' equity:
  On January 1, 2014, Maria Corporation declared and issued a 10% stock dividend when the market price per share was $50.
On January 2, 2014, James Corporation purchased an 80% interest in Maria Corporation for $160,000 from the open market. On January 2, 2014, the fair value of Maria's individual assets and liabilities was equal to book value.
Required:
1. Prepare the journal entry(ies) for Maria Corporation on January 1, 2014.
2. Prepare the journal entry(ies) for James Corporation on January 2, 2014.
3. Prepare the elimination entry(ies) for consolidating work papers on January 2, 2014.
4. Prepare the elimination entry(ies) for consolidating work papers on January 2, 2014 if the 10% stock dividend is not declared and issued on January 1, 2014.

On December 31, 2013, Maria Corporation Has the Following Stockholders