On January 1, 2015, Talbot Company acquired 90% of Lego Company's outstanding stock for $810,000. At the time, Lego Company had stockholders' equity of $650,000. Lego Company distributed a 10% stock dividend on July 1, 2015 when its stock was worth $40 per share and a $0.50 per share cash dividend on December 31, 2015. Lego Company earned net income of $108,000 evenly throughout 2015.
On January 1, 2015, Talbot Company acquired 90% of Lego Company's outstanding stock for $810,000. At the time, Lego Company had stockholders' equity of $650,000. Lego Company distributed a 10% stock dividend on July 1, 2015 when its stock was worth $40 per share and a $0.50 per share cash dividend on December 31, 2015. Lego Company earned net income of $108,000 evenly throughout 2015.
On January 1, 2015, Talbot Company acquired 90% of Lego Company's outstanding stock for $810,000. At the time, Lego Company had stockholders' equity of $650,000. Lego Company distributed a 10% stock dividend on July 1, 2015 when its stock was worth $40 per share and a $0.50 per share cash dividend on December 31, 2015. Lego Company earned net income of $108,000 evenly throughout 2015.
On January 1, 2015, Talbot Company acquired 90% of Lego Company's outstanding stock for $810,000. At the time, Lego Company had stockholders' equity of $650,000. Lego Company distributed a 10% stock dividend on July 1, 2015 when its stock was worth $40 per share and a $0.50 per share cash dividend on December 31, 2015. Lego Company earned net income of $108,000 evenly throughout 2015.
On January 1 2015 Talbot Company acquires 90 of the
#6244 On January 1, 2015, Talbot Company acquires 90% of the outstanding stock of Lego Company for $810,000. At the time of the acquisition, Lego Company has the following stockholders' equity:Common stock ($10 par)................................. $300,000Paid-in capital in excess of par.......................... 150,000Retained earnings.............................................. 200,000Total stockholders' equity............................... $650,000It is determined that Lego Company's book values approximate fair values as of the purchase date. Any excess of cost over book value is attributed to goodwill.On July 1, 2015, Lego Company distributes a 10% stock dividend when the fair value of its common stock is $40 per share. A cash dividend of $0.50 per share is distributed on December 31, 2015. Lego Company's net income for 2015 amounts to $108,000 and is earned evenly throughout the year.1. Prepare the entry required on Lego Company's books to reflect the stock dividend distributed on July 1, 2015. Prepare the stockholders' equity section of the Lego Company balance sheet as of December 31, 2015.2. Prepare the simple equity method entries that Talbot Company would make during 2015 to record its investment in Lego Company.3. Prepare the eliminations that would be made on the December 31, 2015, consolidated worksheet. (Assume the use of the simple equity method.) Prepare a determination and distribution of excess schedule to support the elimination.View Solution: On January 1 2015 Talbot Company acquires 90 of the
