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aimtobeacpa
Major Contributor

Joined: 10 Dec 2009
Online Status: Offline
Posts: 657

Posted: 05 Oct 2010 at 12:39 \| IP Logged

can someone explain how to approach and solve such problems

parma corp and seville corp condensed balance sheets on jan 1 presented below.On jan 2, parma borrowed 60k and used the proceeds to purchase 90% of outstanding common shares of seville.parma had no prior equity interest in seville.ten equal principal and int payments begin dec 30 .The excess of consideration transferred over seville's carrying amount of its identifiable net assets should be assigned 60% to inventory and 40% to goodwill.moreover, the per share fair value of controlling and non controlling interst is same at acquisition date.

	parma	seville
current assets	70000	20000
non current assets	90000	40000
total assets	160000	60000
current liab	30000	10000
long term debt	50000	-
equity	80000	50000
total liab and equity	160000	60000
		On parma's jan 2 consolidated balance sheet, equity should be ans 80000

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BEC-74,82(lost credit),78
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AUD-75
REG-68,72,79

Jack0819
Contributor

Joined: 14 May 2010
Location: United States
Online Status: Offline
Posts: 52

Posted: 05 Oct 2010 at 18:54 \| IP Logged

When you consolidate, you eliminate sub's (seville) retained earning, therefore, the question is asking for parent's equity (parma) which is $80k, the answer is given in the info. It may seem easy but I got a quite few questions on Becker hw just like this one, no calculation required.

Someone please correct me if I am wrong. =)

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AUD 11/24/10

Becker User
Class of 2010

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