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.

---

Definitions:

Standards of Living

The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

Post-traumatic Stress Disorder

A psychiatric disorder that can occur in people who have experienced or witnessed a traumatic event, characterized by flashbacks, nightmares, severe anxiety, and uncontrollable thoughts about the event.

Flashbacks

A sudden and intense re-experiencing of past memories or events, often associated with traumatic experiences.

Impulsive Outbursts

Sudden, unplanned expressions of emotion or action without thought of the potential consequences.