Journal entries for push down accounting
On January 1, 2011, Pin Corporation acquired a 90 percent interest in Set Corporation for $2,520,000. The book values and fair values of Set’s assets and equities on this date are as follows (in thousands):
|
Book Value |
Fair Value |
|
|
Cash |
$ 200 |
$ 200 |
|
Accounts receivable—net |
300 |
300 |
|
Inventories |
500 |
600 |
|
Land |
300 |
800 |
|
Buildings—net |
700 |
1,000 |
|
Equipment—net |
800 |
600 |
|
$2,800 |
$3,500 |
|
|
Accounts payable |
$ 550 |
$ 550 |
|
Other liabilities |
450 |
550 |
|
Capital stock |
1,000 |
|
|
Retained earnings |
800 |
|
|
$2,800 |
REQUIRED
1. Prepare the journal entries on Set Corporation’s books to push down the values reflected in the acquisition price under parent company theory.
2. Prepare the journal entries on Set Corporation’s books to push down the values reflected in the acquisition price under entity theory.