Advanced Financial Accounting ACCT 302

1. Explain the various forms of Business Combination.

2. Discuss the methods of accounting for Investment in Common Stock.

3. Explain the concept of External Expansion? 

4. Zeo Corporation acquired 100 percent of the voting shares of Muscle Inc. by issuing 10,000 new shares of $15 par value common stock with a $30 market value.

Required:

1) Which company is the parent and which is the subsidiary?

2) Define a subsidiary corporation.

3) Define a parent corporation.

4) Which entity prepares consolidated worksheet?

5) Why are elimination entries used? 

5. ABC Company acquires 20 percent of XYZ Company’s common stock for $200,000 at the beginning of the year but does not gain significant influence over XYZ. During the year, XYZ has net income of $120,000 and pays dividends of $40,000. Record entries in the books of ABC Company.