90.2K

Verified Solution

Link Copied!

Promise Enterprises acquired 80 percent of Brown Corporations voting common stock on January 1, 20X3, for $376,000. At that date, the fair value of the noncontrolling interest of Brown Corporation was $94,000. Immediately after Promise acquired its ownership, Brown purchased 70 percent of Tann Companys stock for $185,500. The fair value of the noncontrolling interest of Tann Company was $79,500 at that date. During 20X3, Promise reported operating income of $270,000 and paid dividends of $90,000. Brown reported operating income of $160,000 and paid dividends of $50,000. Tann reported net income of $60,000 and paid dividends of $10,000. At January 1, 20X3, the stockholders equity sections of the balance sheets of the companies were as follows:

	Promise Enterprises				Brown Corporation				Tann Company
Common Stock		$	230,000			$	210,000			$	140,000
Additional Paid-In Capital			160,000				70,000				80,000
Retained Earnings			380,000				190,000				45,000
Total Stockholders Equity		$	770,000			$	470,000			$	265,000

Required:
a.	Prepare the journal entries recorded by Brown for its investment in Tann during 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b.	Prepare the journal entries recorded by Promise for its investment in Brown during 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

c.	Prepare the consolidation entries related to Browns investment in Tann and Promises investment in Brown that are needed in preparing consolidated financial statements for Promise and its subsidiaries at December 31, 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

References

eBook & Resources

Answer & Explanation Solved by verified expert

See Answer