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Question: power corporation acquired 100 percent ownership of scrub company on...

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Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scrub Company reported assets and liabilities with book values of $420,000 and $184,000, respectively, common stock outstanding of $84,000, and retained earnings of $152,000. The book values and fair values of Scrub’s assets and liabilities were identical except for land, which had increased in value by $21,000, and inventories, which had decreased by $6,000.

Prepare the following consolidation entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $232,000.

  • Record the excess value (differential) reclassification entry.
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