Johnsen Corporation Paid $225,000 for a 70% Interest in Jonas

question 5

Essay

Johnsen Corporation paid $225,000 for a 70% interest in Jonas Corporation on January 1,2014.On that date,Jonas's balance sheet accounts,at book value and fair value,were as follows:
Assets
Equities
Required:
1.Prepare the journal entry necessary on January 1,2014 on Jonas Corporation's books.Both companies use push-down accounting and the entity theory.
2.Prepare the balance sheet for Jonas Corporation immediately after the acquisition on January 1,2014.

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Definitions:

Employer's Liability

Legal responsibility of an employer for injuries, illnesses, or damages suffered by employees as a result of their employment.

Respondeat Superior

A legal principle stating that an employer or principal is legally liable for the wrongful actions of an employee or agent, provided these actions happened in the course of their employment or agency.

Employee

Someone who is classified as a paid worker for a principal.

Apparent Authority

A situation where a reasonable third party would understand that an agent had authority to act, even if the agent did not have actual authority.