On December 31,20X6,the Balance Sheets of the Power Company and the Pro

question 20

Essay

On December 31,20X6,the balance sheets of the Power Company and the Pro Company are as follows (amounts in thousands):
Power Company has 100,000 shares of common stock outstanding: Pro Company has 45,000 shares outstanding.All assets and liabilities have book value equal to fair values,except as noted.
The plant and equipment has an estimated remaining useful life of nine years from the date of acquisition.The long term liabilities mature on December 31,2010.Market value of the new shares issued was $90 per share at issuance.
Required:
Assume that 80% of the outstanding shares of Pro were acquired for cash of $5.8 million.Calculate goodwill and the non-controlling interest on the consolidated balance sheet at December 31,20X6 under the entity method and the parent-company extension method.
At December 31,20X9,the balance in the long term liabilities of Pro is still $500,000 and the balance of log term liabilities for Power is $900,000.Calculate the balance in the consolidated Long-term liabilities balance as at December 21,20X9.

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Definitions:

Capitalism

An economic system where private ownership and free markets govern trade and production with the primary goal of profit.

Business Enterprises

Business Enterprises refer to organizations engaged in commercial, industrial, or professional activities.

Elite Theory

posits that societal power is concentrated in the hands of a small, elite group, and that this minority makes the most important political decisions.

Self-Interest

Actions or decisions motivated by personal gain or benefit, often used in the context of economic behaviors and theories.