On December31 2011 Purple Corp purchased Sand Company for 20

On December31, 2011, Purple Corp. purchased Sand Company for: 20,000,000 Sand Compary\'s balance sheet at the time of acquisition is provided below 80% | of the outstanding common stock of Difference BV vs. FV Cash Account Receivable Irwentory Plant and Eqprent Building-HQ Land Balanoe Sheet 12/31/2011 $250,000 $ 1.500,000 $ 7,000,000 $14,000,000 $ 2,000,000 $250,000 $ 25,000000 Fair Value 12/31/2011 $ 250,000 $ $ 1,500,000$ $ 4,000,000(3,000,000) $14,000,000$ $ 2,000,000$ $ 2,250,000$ $24,000,000$(1,000,000) 2,000,000 Total Assets iabilities Mortpage Long-term debt $ 4500,000 $ 6,500,000 $ 3,500,000 $14,500,000 $ 4500,000$ $ 6,500,000$ $ 3,000,000$ $14,000,000$ 500,000 500,000 Total Liahilities Common Stock, $1 par value APIC RE Sub Total Treasury Shares (3,000shares) Total Equity $150,000 $ 3,400,000 $ 8,100,000 $11,6s0,000 $ 1,150,000 $10500,000 $ 25,000000 Based on the above data, prepare the elimination entries necessary to complete the consolidated financial statement workpaper. Instructor- Prepare the CAD fist The AD been partily completed below. Percentage Puchased 80% 100% Total Imolied Panent $2D,000,000 $ 8,400,000 $11,600,000 NCI Fair Value Given Book Value Received $ 5,000,000$25,000,000 $ 2,100,000$ 10,500,000 $ 2,900,000$ 14500,000 Difference

Solution

CAD

Fair value adjustment:

Elimination entry:

Fair value of consideration given:
Ref	Particulars	Amount
	Cash	2,00,00,000
a	Total consideration	2,00,00,000
b	Stake acquired	80%
c=a/b	Fair value of subsidiary	2,50,00,000
d=100%-b	Minority interest	20%
e=c*d	Fair value of minority interest	50,00,000