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Computation and Allocation Schedule for the difference book value of equity aquired and the value implied by the purchase price
85% | 15% | 100% | |
Parent share | NCI share | Equity value | |
Purchase Value and implied value(A) | $541,800 | $95,611 | $637,411 |
Book Value of Equity acquired: | |||
Commom Stock(B) | 338,385 | 59,715 | 398,100 |
Retained earnings(C) | 122,145 | 21,555 | 143,700 |
Total Book value(D)=B+C | 460,530 | 81,270 | 541,800 |
Difference between implied and book value (E)=A-D | 81,270 | 14,341 | 95,611 |
Marketable Securities (F) | (21,080) | (3,720) | (24,800) |
Equipment (G) | (16,830) | (2,970) | (19,800) |
Balance (E-F-G) | 43,360 | 7,651 | 51,011 |
Record New Goodwill | (43,360) | (7,651) | (51,011) |
Balance | $0 | $0 | $0 |
Note: (i) Purchare value and implied value=15% NCI value= $541,800100/8515/100=$95,611
(ii) Marketable Securties = 100% Equity Value=Fair Value - Book Value=$44,600-$19,800=$24800
(iii) Equipment = 100% Equity Value = Fair value- Book value = $140,000-$120,200=$19800
Exercise 5-1 On January 1, 2013, Pam Company purchased an 85% interest in Shaw Company for...
Exercise 5-1 On January 1, 2013, Pam Company purchased an 85% Interest In Shaw Company for $542,200. On this date, Shaw Company had common stock of $403,400 and retalned earnings of $138,800. An examination of Shaw Company's assets and liabilities revealed that their book value was equal to their fair value except for marketable securities and equipment: Book Value Falr Value Marketable securities $20,200 $45,100 Equipment (net) 119,900 140,000 v (a) 2 Your answer is partially correct. Try again. Prepare...
a)prepare a computation and allocation schedule b)The entries to eliminate the investment account: Exercise 5-1 On January 1, 2013, Pam Company purchased an 85% Interest in Shaw Company for $542,200. On this date, Shaw Company had common stock of $403,400 and retained earnings of $138,800. An examination of Shaw Company's assets and liabilities revealed that their book value was equal to their fair value except for marketable securities and equipment: Marketable securities Equipment (net) Book Value $20,200 119,900 Fair Value...
5-1 and 5-2 CISE 5-1 interest in Shaw Company for $540,000 Allocation of Cost LO 1 LO3 On January 1, 2018, Pam Company purchased an 85% interest in Shaw Company On this date, Shaw Company had common stock of $400,000 and retained carnings of An examination of Shaw Company's assets and liabilities revealed that the equal to their fair value except for marketable securities and equipment: assets and liabilities revealed that their book value was Book Value Fair Value Marketable...
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On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $1,997,000. At that time Sharp Company had common stock of $1,516,000 and retained earnings of $702,000. The book values of Sharp Company’s assets and liabilities were equal to their fair values except for land and bonds payable. The land had a fair value of $99,000 and a book value of $81,000. The outstanding bonds were issued at par value on January 1, 2008, pay 9% annually,...
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Exercise 5-4 On January 1, 2015, Porter Company purchased an 80% interest in Salem Company for $262,600. On this date, Salem Company had common stock of $204,000 and retained earnings of $130,100. An examination of Salem Company's balance sheet revealed the following comparisons between book and fair values: Inventory Other current assets Equipment Land Book Value 530,000 50,600 305,800 199,100 Fair Value $35,200 54,300 356,100 199,100 Your answer is partially correct. Try again. Determine the amounts that should be allocated...