Question

Albuquerque, Inc., acquired 36,000 shares of Marmon Company several years ago for $720,000. At the acquisition date, Marmon reported a book value of $750,000, and Albuquerque assessed the fair value of the noncontrolling interest at $80,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses. At the present time, Marmon reports $790,000 as total stockholders' equity, which is broken down as follows: Common stock ($11 par value) Additional paid-in capital Retained earnings Total $ 440,000 270,000 80,000 $ 790,000 View the following as independent situations: & b. Marmon sells 8.000 and 5,000 shares of previously unissued common stock to the public for $25 and $20 per share. Albuquerque purchased none of this stock. What journal entry should Albuquerque make to recognize the impact of this stock transaction? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations.)

Answer 1

Solution 840000 1040000 Working Adfultion Interest wat beganning ( 36000)/440000/1] = 90% Adjusted till date fair value [ 720000 + 80000] + [790000 - 760000] After the stock Issue adjusted till date fair value Ľ840000]+ 8000x25] Current Interest after Share Issuance 75% [ 36000] /[ 40000 48000] Investment equity balance before share Issuance [720000] + [ 40000 x 90 11] Implied book value of Investment after share . [1040000 x 75%] Increase in Additional paid an capital 756000 780000 Issuance ^75% 24000 Transcation 1 General Journal Debit Credit Investment in Marmon 24000 24000 Addetional paid in capital [To record the adjustment of Sale of additional shares by subsedary]

working. Acquisition Interest at beginning (36000)/(440000/11) = 90% Adjusted till date fair value 840000 [ 7200000 + 80000]+[790000 - 750000] After the stock Issue adjusted till date fair value 940000 [ 840008].+ (5000x20] Current Interest after Share Issuance .80% (36000] /C 40000 45000] Investment equity balance before share Issuance Ľ 720000] + [ 40000 x 9006) 752000 Implied book value of Investment after share [ 940080 x 80 % ] Decrease an Addetional pold in capital 756000 Issuance 4000 Delft General Jornal Transcation Gredet 4000 4000 Addetional pard in capital Investment in Marmon [ To record the adjustment of Sale of additional shares by Subsidiary