The following comparative statements of stockholders’ equity are prepared for Nolan Corporation:
Jan.1,2015 Jan.1,2017 Jan.1,2019
Common stock ($10 par). . . . . . . $300,000 $300,000 $300,000
Paid-in capital in excess of par . . . 60,000 60,000 60,000
Retained earnings . . . . . . . . . . . . . . . 42,000 120,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . .$360,000 $402,000 $480,000
Less treasury stock (at cost) . . . . (75,000) (75,000)
Total stockholders’ equity. . . . . . $360,000 $327,000 $405,000
Tarman Corporation acquires 60% of Nolan Corporation common stock for $12 per share on January 1, 2015, when the latter corporation is formed.
On January 1, 2017, Nolan Corporation purchases 5,000 shares of its own common stock from noncontrolling interests for $15 per share. These shares are accounted for as treasury stock at cost.
Assuming Tarman Corporation uses the cost method to record its investment in Nolan Corporation, prepare the necessary cost-to-simple-equity conversion and the eliminations and adjustments required on the consolidated worksheet as of December 31, 2019. Include all pertinent supporting calculations in good form.