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Kaplan MT482 Unit 5 Assignment

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Question;Complete the Case Study: Accounting Entries for Consolidation of Intercorporate Investments. For this Assignment, turn to page 321 in your textbook (Chapter 5 of Financial Statements Analysis), and complete Case 5-1, Accounting Entries for Consolidation of Intercorporate Investments ? Axel Corporation This is a challenging activity. You should prepare to spend substantial time working on your response. Directions for Submitting Your Project Before you submit your project, you should save your work on your computer in a location, and with a name, that you will remember. Make sure your project is in the appropriate format (Word, Excel, PowerPoint, or other), then, when you are ready, you may submit on the Dropbox page. MT482 ? Unit 5 Assignment: Axel Case 5-1 Content, Analysis, and Effective writing skills Points Possible Possible Earned Response includes the journal entries for Axel Corp. to record the acquisition of Wheal Company stock assuming: ? pooling accounting ? purchase accounting. Response includes the worksheet entries for Axel Corp. to eliminate the investment in Wheal Company stock in preparation for a consolidated balance sheet at December 31, Year 4 assuming: ? pooling accounting ? purchase accounting. Response includes the calculation of consolidated retained earnings for December 31: ? Axel Corp. uses the pooling method for this business combination. ? Axel Corp. uses the purchase method for acquisition of Wheal Company 24 Correct spelling and grammarCASE 5?1: Accounting Entries for Consolidation of Intercorporate InvestmentsAxel Corporation acquires 100% of the stock of Wheal Company on December 31, Year 4. Thefollowing information pertains to Wheal Company on the date of acquisition:Book Value Fair ValueCash......................................................... $ 40,000 $ 40,000Accounts receivable.................................. 60,000 55,000Inventory................................................... 50,000 75,000Property, plant, and equipment (net)........ 100,000 200,000Secret formula (patent)............................ ? 30,000Total assets.............................................. $250,000 $400,000Accounts payable..................................... $ 30,000 $ 30,000Accrued employee pensions...................... 20,000 22,000Long-term debt......................................... 40,000 38,000Capital stock............................................ 100,000 ?Other contributed capital......................... 25,000 ?Retained earnings.................................... 35,000 ?Total liabilities and equity........................ $250,000 $ 90,000Axel Corporation issues $110,000 par value ($350,000 market value on December 31, Year 4) ofits own stock to the shareholders of Wheal Company to consummate the transaction, and WhealCompany becomes a wholly owned, consolidated subsidiary of Axel Corporation.Required:a. Prepare journal entries for Axel Corp. to record the acquisition of Wheal Company stock assuming (1) poolingaccounting and (2) purchase accounting.b. Prepare the worksheet entries for Axel Corp. to eliminate the investment in Wheal Company stock in preparationfor a consolidated balance sheet at December 31, Year 4 assuming (1) pooling accounting and (2) purchaseaccounting.c. Calculate consolidated retained earnings at December 31, Year 4 (Axel?s retained earnings at this date are$150,000), assuming:(1) Axel Corp. uses the pooling method for this business combination.(2) Axel Corp. uses the purchase method for acquisition of Wheal Company.

 

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