Question textAcquisitions achieved in stages (step acquisitions) Assume that a parent company gains control over its subsidiary with the purchase of a 45% interest for $180,000. Prior to this transaction, the parent’s Equity Investment account reports a balance of $112,000 on the acquisition date and represents a 35% interest in the subsidiary. The fair value of 100% of the subsidiary on the date the parent obtains control of the subsidiary is $400,000 (assume no premium for control). Prepare the journal entries to record the acquisition. [table] Description | Debit | Credit Answer 1APICCashCommon stockEquity incomeEquity investmentGain on revaluation of subsidiaryGoodwillNet income attributable to noncontrolling interestNoncontrolling interestRetained earningsCorrectMark 1.00 out of 1.00 | Answer 2CorrectMark 1.00 out of 1.00 | Answer 3CorrectMark 1.00 out of 1.00 Answer 4APICCashCommon stockEquity incomeEquity investmentGain on revaluation of subsidiaryGoodwillNet income attributable to noncontrolling interestNoncontrolling interestRetained earningsCorrectMark 1.00 out of 1.00 | Answer 5CorrectMark 1.00 out of 1.00 | Answer 6CorrectMark 1.00 out of 1.00 To record purchase. | | Answer 7APICCashCommon stockEquity incomeEquity investmentGain on revaluation of subsidiaryGoodwillNet income attributable to noncontrolling interestNoncontrolling interestRetained earningsCorrectMark 1.00 out of 1.00 | Answer 8CorrectMark 1.00 out of 1.00 | Answer 9CorrectMark 1.00 out of 1.00 Answer 10APICCashCommon stockEquity incomeEquity investmentGain on revaluation of subsidiaryGoodwillNet income attributable to noncontrolling interestNoncontrolling interestRetained earningsCorrectMark 1.00 out of 1.00 | Answer 11CorrectMark 1.00 out of 1.00 | Answer 12CorrectMark 1.00 out of 1.00 To record write-up. | | [/table]