Repurchase of Shares by Subsidiary from Nonaffiliate

Blatant Advertising Corporation acquired 60 percent of Quinn Manufacturing Company’s shares on December 31, 20X1, at underlying book value of $180,000. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Quinn Manufacturing. Quinn’s balance sheet on January 1, 20X7, contained the following balances:

Cash	$ 80,000	Accounts Payable	$ 60,000
Accounts Receivable	100,000	Bonds Payable	240,000
Inventory	160,000	Common Stock	100,000
Buildings & Equipment	700,000	Additional Paid-In Capital	150,000
Less: Accumulated Depreciation	(240,000)	Retained Earnings	250,000
Total Assets	$800,000	Total Liabilities & Equities	$800,000

On January 1, 20X7, Quinn purchased 2,000 of its own $10 par value common shares from Nonaffiliated Corporation for $42 per share.

Required

a. Compute the change in the book value of the equity attributable to the parent as a result of the repurchase of shares by Quinn Manufacturing.

b. Give the entry to be recorded on Blatant Advertising’s books to recognize the change in the book value of the shares it holds.

c. Give the elimination entry needed in preparing a consolidated balance sheet immediately following the purchase of shares by Quinn.