Parrot Inc.acquired an 85% interest in Sparrow Corporation on January 2,2011 for $42,500 cash when Sparrow had Capital Stock of $15,000 and Retained Earnings of $25,000.Sparrow's assets and liabilities had book values equal to their fair values except for inventory that was undervalued by $2,000.Balance sheets for Parrot and Sparrow on January 2,2011,immediately after the business combination,are presented in the first two columns of the consolidated balance sheet working papers.
Required:
Complete the consolidation balance sheet working papers for Parrot and subsidiary at January 1,2011.

Question

Parrot Inc.acquired an 85% interest in Sparrow Corporation on January 2,2011 for $42,500 cash when Sparrow had Capital Stock of $15,000 and Retained Earnings of $25,000.Sparrow's assets and liabilities had book values equal to their fair values except for inventory that was undervalued by $2,000.Balance sheets for Parrot and Sparrow on January 2,2011,immediately after the business combination,are presented in the first two columns of the consolidated balance sheet working papers.
   Required:
Complete the consolidation balance sheet working papers for Parrot and subsidiary at January 1,2011.

Quizplus · Accepted Answer

The Answer of Parrot Inc.acquired an 85% interest in Sparrow Corporation on January 2,2011 for $42,500 cash when Sparrow had Capital Stock of $15,000 and Retained Earnings of $25,000.Sparrow's assets and liabilities had book values equal to their fair values except for inventory that was undervalued by $2,000.Balance sheets for Parrot and Sparrow on January 2,2011,immediately after the business combination,are presented in the first two columns of the consolidated balance sheet working papers.
   Required:
Complete the consolidation balance sheet working papers for Parrot and subsidiary at January 1,2011.