Homework Answers
| ans a | |||
| Acquisition Price | $4,400,000 | ||
| Book value acquired ($ 6,110,000*25% ) | ($ 1,527,500) | ||
| Excess payment | $2,872,500 | ||
| Excess fair value -Computing equipment (1295000*25%) | 323,750 | ||
| Excess fair value-Patented technology (3985000*25%) | 996,250 | ||
| Excess fair value-Trade Mark (1935000*25%) | 483,750 | ||
| 1803750 | |||
| Goodwill | $1,068,750 | ||
| Amortization | |||
| Computing equipment (323750/7) | 46250 | ||
| Patented technology (996250/3) | 332,083 | ||
| Trademark-indefinate | 0 | ||
| Annual amortization | 378,333 | ||
| Carrying Amount | Fair Value | Difference | |
| Cash and receivables | 195,000 | 195,000 | 0 |
| Computing equipment | 5,765,000 | 7,060,000 | 1,295,000 |
| Patented technology | 185,000 | 4,170,000 | 3,985,000 |
| Trademark | 235,000 | 2,170,000 | 1,935,000 |
| Liabilities | -270,000 | -270,000 | 0 |
| Net Assets | 6,110,000 | 13,325,000 | |
| ans b | |||
| Equity income accural 2017 (1970000*25%) | 492,500 | ||
| Amortization for 2017 | -378,333 | ||
| Equity in 2017 earnings of Sauk Trail | 114167 | ||
| Equity income accural 2018 (2155000*25%) | 538,750 | ||
| Amortization for 2018 | -378,333 | ||
| Equity in 2018 earnings of Sauk Trail | 160,417 | ||
| ans c | |||
| Acquisition Price | $4,400,000 | ||
| Equity in 2017 earnings of Sauk Trail | 114167 | ||
| Dividends-(235000*25%) | -58750 | ||
| Investment in Sauk trail dec 31 2017 | $4,455,417 | ||
| Investment in Sauk trail dec 31 2017 | $4,455,417 | ||
| Equity in 2017 earnings of Sauk Trail | 160,417 | ||
| Dividends-(245000*25%) | -61,250 | ||
| Investment in Sauk trail dec 31 2017 | $4,554,584 | ||
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