Homework Problem 4
On April 1 C purchased D for $1,800. At the time of the acquisition, C determined that D had
undervalued assets as follows:
Asset
Land
Building
Patent
Research and development Value
200
400
300
250 Remaining Life
Forever
10
15
5 Their trial balances at the end of year 1 were as follows: Cash
Accounts receivable
Land
Building
Accumulated depreciation
Investment in D
Accounts payable
Common stock
Retained earnings
Revenue
Depreciation expense
Other expenses
Dividends C
750
350 1,600
(450)
(350)
(1,150)
(1,840)
1,090 D
850
50
200
400
(150)
(160)
(100)
(450)
(1,580)
25
715
200 R: Prepare the journal entries and consolidating entries for the end of year 1 and the resulting
consolidated trial balance.