Parrot Inc

question 12

Essay

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.

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Definitions:

Prop Roots

Supporting roots that grow above ground from the lower part of the stem, providing additional stability to certain plants.

Contractile Roots

Contractile roots are specialized plant roots that contract and pull the plant deeper into the soil, helping to adjust the plant’s depth in the soil for optimal growth.

Pneumatophores

Specialized aerial roots found in certain plants like mangroves that facilitate gas exchange in waterlogged environments.

Secondary Vascular Tissues

Tissues in plants that are involved in transporting water, nutrients, and sugars, developed after the primary growth phase.