Consolidation at date of acquisition (purchase price
greater than book value, acquisition journal entries, deferred tax
liability)
Assume that the parent company acquires its subsidiary by
exchanging 118,000 shares of its $1 par value Common Stock, with a
market value on the acquisition date of $30 per share, for all of
the outstanding voting shares of the investee. In its analysis of
the investee company, the parent values all of the subsidiary's
assets and liabilities at an amount equaling their book values
except for PPE assets that are undervalued by $1 million, an
unrecorded Customer List that the parent values at $200,000, and an
unrecorded Brand Name asset valued at $500,000. And, finally,
assume that the tax basis of the PPE assets is equal to their book
values, and your tax rate is 35%.
b. Given the following acquisition-date balance sheets for the parent and its subsidiary, prepare the consolidation spreadsheet.
Elimination Entries | |||||||
---|---|---|---|---|---|---|---|
Balance Sheet | Parent | Subsidiary | Dr | Cr | Consolidated | ||
Assets | |||||||
Cash | $783,300 | $104,000 | $Answer | ||||
Accounts receivable | 384,000 | 696,000 | Answer | ||||
Inventory | 582,000 | 894,000 | Answer | ||||
Equity investment | 3,540,000 | Answer | [E] | Answer | |||
Answer | [A] | ||||||
Property, plant and equipment (PPE), net | 14,899,600 | 1,654,000 | [A] | Answer | Answer | ||
Customer list | [A] | Answer | Answer | ||||
Brand name | [A] | Answer | Answer | ||||
Goodwill | [A] | Answer | Answer | ||||
$20,188,900 | $3,348,000 | $Answer | |||||
Liabilities and stockholders' equity | |||||||
Accounts payable | $188,100 | $127,000 | $Answer | ||||
Accrued liabilities | 220,800 | 221,000 | Answer | ||||
Long-term liabilities | 2,000,000 | 1,000,000 | Answer | [A] | Answer | ||
Common stock | 680,000 | 200,000 | [E] | Answer | Answer | ||
APIC | 5,200,000 | 250,000 | [E] | Answer | Answer | ||
Retained earnings | 11,900,000 | 1,550,000 | [E] | Answer | Answer | ||
$20,188,900 | $3,348,000 | Answer | Answer | $Answer |
Would like to know how to calculate the retained earnings and goodwill portions of this problem. The rest I have already answered.
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries, deferred tax...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries, deferred tax liability) Assume that the parent company acquires its subsidiary by exchanging 118,000 shares of its $1 par value Common Stock, with a market value on the acquisition date of $30 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries, deferred tax liability) Assume that the parent company acquires its subsidiary by exchanging 118,000 shares of its $1 par value Common Stock, with a market value on the acquisition date of $30 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries, deferred tax liability) Assume that the parent company acquires its subsidiary by exchanging 116,000 shares of its $1 par value Common Stock, with a market value on the acquisition date of $30 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries, deferred tax liability) Assume that the parent company acquires i exchanging 96,000 shares of its $5 par value Common Stock, with a fair value on the acquisition date of 542 per share, for all of the outstanding voting shares of the investee. In its analysls of the Investee company, the falr value of each of the subsldlary's assets and llablltiles equals their respective book values except...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries Assume that the parent company acquires its subsidiary by exchanging 84,000 shares of its $2 par value Common Stock, with a fair value on the acquisition date of $45 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary’s assets and liabilities at an amount equaling their book values except...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries Assume that the parent company acquires its subsidiary by exchanging 84,000 shares of its $2 par value Common Stock, with a fair value on the acquisition date of $41 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary’s assets and liabilities at an amount equaling their book values except...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries Assume that the parent company acquires its subsidiary by exchanging 84,000 shares of its $2 par value Common Stock, with a fair value on the acquisition date of $42 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their book values except...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries Assume that the parent company acquires its subsidiary by exchanging 84,000 shares of its $2 par value Common Stock, with a fair value on the acquisition date of $44 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary’s assets and liabilities at an amount equaling their book values except...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries Assume that the parent company acquires its subsidiary by exchanging 84,000 shares of its $2 par value Common Stock, with a fair value on the acquisition date of $42 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their book values except...
Consolidation at date of acquisition (purchase price equals book value) 59. Consolidation at date of acquisition (purchase price equals book value) A parent company acquires its subsidiary by exchanging 30,000 shares of its Common Stock, with a fair value on the acquisition date of $20 per share, for all of the outstanding voting shares of the investee. a. What is the total fair value of the subsidiary on the acquisition date? b. Prepare the consolidation entry or entries on the...