Question

Global Car Corporation acquires off the stock of Parts Company and reports the acquisition as a stock investment on its own books. The acquisition involves the following payments Cash paid to Parts Company Shareholders Cash paid to consultants and lawyers Fair value of new Global Car Corporation stock issued Stock registration fees, paid in cash Fair value of earnings contingency (If paid, will occur 3 years subsequent to acquisition) $5,000,000 1,200,000 36,000,000 900,000 250,000 1000 Shares $2 Par Global Car Corporation Book Value Dr (Cr) Parts Company Book Value Dr (Cr) Fair Value Dr (Cr) $1,000,000 27,000,000 3,400,000 (400,000) (26,000,000) (500,000) (8,500,000) 2,000,000 1,400,000 600,000 $0 $1,200,000 20,000,000 6,000,000 (400,000) (25,000,000) Current assets Fixed assets, net Trademarks Current liabilities Long-term liabilities Common Stock, par value Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock $30,000,000 420,000,000 89,000,000 (25,000,000) (350,000,000) (8,000,000) (110,000,000) (45,000,000) (4,000,000) 3,000,000 $0 In addition to the assets reported on Parts Company balance sheet, the following previously unreported intangible assets are identified Note: Some of these intangibles may not be separately capitalized per ASC Topic 805 Fair Value Licensing Agreements Skilled Workforce Order backlogs Future synergies between Global Car Corporation and Parts Company supply chains $2,400,000 15,000,000 5,000,000 1,600,000 Required: You should use cell references in providing a number or preparing a calculations by referencing the data above. Prepare you answer A. Prepare a schedule calculating the excess of acquisition cost over Parts Company's book value, and its allocation to Parts Company's identifiable net assets and goodwill. There is an example of a table of this analysis on page 97. B. Prepare a working paper to consolidate the balance sheets of Global Car Corporation and Parts Company at the date of acquisition. Your working paper should be set up like Exhibit 3.3 and you need to designate the Eliminations R and E.

This question talks about exhibit 3.3 which you can ignore but just in case anyone solving this problem wants one like one who tried earlier here is the Exhibit

Answer 1