Sale of Additional Shares to Parent

Lane Manufacturing Company acquired 75 percent of Tin Corporation stock at underlying book value. At the date of acquisition, the fair value of the noncontrolling interest was equal to 25 percent of Tin’s book value. The balance sheets of the two companies for January 1, 20X1, are as follows:

LANE MANUFACTURING COMPANY Balance Sheet January 1, 20X1
Cash	$ 227,500	Accounts Payable	$ 50,000
Accounts Receivable	60,000	Bonds Payable	400,000
Inventory	100,000	Common Stock	200,000
Buildings & Equipment	600,000	Additional Paid-In Capital	50,000
Less: Accumulated Depreciation	(150,000)	Retained Earnings	400,000
Investment in Tin Products	262,500	Â	Â
Total Assets	$1,100,000	Total Liabilities & Equities	$1,100,000

 

TIN CORPORATION Balance Sheet January 1, 20X1
Cash	$ 60,000	Accounts Payable	$ 50,000
Accounts Receivable	100,000	Bonds Payable	300,000
Inventory	180,000	Common Stock ($10 par)	100,000
Buildings & Equipment	600,000	Additional Paid-In Capital	50,000
Less: Accumulated Depreciation	(240,000)	Retained Earnings	200,000
Total Assets	$700,000	Total Liabilities & Equities	$700,000

On January 2, 20X1, Lane purchased an additional 2,500 shares of common stock directly from Tin for $150,000. Any purchase differential is assigned to buildings and equipment.

Required

a. Prepare the elimination entry needed to complete a consolidated balance sheet worksheet immediately following the issuance of additional shares to Lane.

b. Prepare a consolidated balance sheet worksheet immediately following the issuance of additional shares to Lane.