Punk Corporation purchased 90 percent of Soul Company's voting common shares on January 1, 20X2,...
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Punk Corporation purchased 90 percent of Soul Company's voting common shares on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soul Company. Punk also purchased $85,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $89,000. The bonds pay interest annually on December 31. The trial balances of the companies as of December 31, 20X4, are as follows: Punk Corporation Soul Compan Item Cash & Receivables Inventory Buildings & Equipment Investment in Soul Company Stock Investment in Soul Company Bonds Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Bond Premium Common Stock Retained Earnings Sales Interest Income Income from Soul Company Stock Total Debit 36,000 165,000 400,000 151,110 86,600 70,000 15,000 15,100 25,000 Credit Debit 50,600 86,000 253,000 Credit 63,800 10,000 4,300 15,000 $139,000 85,300 185,000 $79,000 56,100 85,000 1,600 78,000 48,000 135,000 118,000 231,000 150,000 4,300 51,210 $963,810 $963,810 $482,700 $482,700
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