Homework Answers
a. Amsterdam fair value implied by price paid by Morey
$637,000 ÷ 70% = $910,000
b. Revaluation gain
1/1 equity investment in Amsterdam (book value) A $175,175
25% income for 1st 6 months (306,000-185000)x0.25x6/12 B = $15,125
Investment book value at 6/30 C= (A+B) $ 190,300
Fair value of investment (25% x 910,000) D $227,500
Gain on revaluation to fair value ( D-C) $37,200
c. Goodwill at 12/31
Fair value of Amsterdam at 6/30 $910,000
Book value at 6/30 (500,000+277,700 + [ (306,000-185,000)÷ 2]) $838,200
Excess fair value $71,800
Allocation to goodwill (no impairment) $71,800
d. Noncontrolling interest
5% fair value balance at 6/30 (910,000*5%) $45,500
5% Income from 6/30 to 12/31 (306,000-185,000)÷ 2*5% $3,025
5% dividends (20,000*0.05) (1,500)
Noncontrolling interest 12/31 $47,025
If any doubts please mention in comment
5% diviends = 20,000*.05 = 1,000 (not 1,500)
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