Prepare journal entries and balance sheet under push down accounting
Book values and fair values of Sli Corporation’s assets and liabilities on December 31, 2010, are as follows (in thousands):
|
Book Value |
Fair Value |
|
|
Cash |
$ 140 |
$ 140 |
|
Accounts receivable—net |
160 |
160 |
|
Inventories |
160 |
200 |
|
Land |
300 |
400 |
|
Buildings—net |
700 |
1,000 |
|
Equipment—net |
440 |
600 |
|
$1,900 |
$2,500 |
|
|
Accounts payable |
$ 200 |
$ 200 |
|
Note payable |
280 |
300 |
|
Capital stock |
1,000 |
|
|
Retained earnings |
420 |
|
|
$1,900 |
On January 1, 2011, Por Corporation acquires all of Sli’s capital stock for $2,500,000 cash. The acquisition is recorded using push down accounting.
REQUIRED
1. Prepare the January 1 journal entry on Sli’s books to record push down values.
2. Prepare a balance sheet for Sli Corporation immediately after the acquisition on January 1 under pushdown accounting.