On January 1, 2014, Panel Company Acquired 90% of the Common

question 29

Essay

On January 1, 2014, Panel Company acquired 90% of the common stock of Singapore Company for $650,000. At that time, Singapore had common stock ($5 par) of $500,000 and retained earnings of $200,000.
On January 1, 2016, Singapore issued 20,000 shares of its unissued common stock, with a market value of $7 per share, to noncontrolling stockholders. Singapore's retained earnings balance on this date was $300,000. Any difference between cost and book value relates to Singapore's land. No dividends were declared in 2016.
Required:
A. Prepare the entry on Panel's books to record the effect of the issuance assuming the cost method.
B. Prepare the elimination entries for the preparation of a consolidated statements workpaper on December 31, 2016 assuming the cost method.