Question
need help... please fix the errors as soon as possible. Thanks in advance!
Pushdown Accounting Assume a parent company acquires its subsidiary by paying $1,200,000 for all of the outstanding voting sh
b. Assume the subsidiary elects to apply pushdown accounting immediately after the above financial statements were prepared.
c. Prepare the consolidation entry or entries on the date of acquisition, assuming the subsidiary applied pushdown accounting
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Answer

Calculation of Goodwill
Consideration Transferred 12,00,000.00
Less: Net identifiable asset
Common Stock 1,00,000.00
Retained Earnings 2,00,000.00
Additional Paid-in Capital 3,00,000.00
Fair value adjustment for property equipment 1,50,000.00
Fair value adjustment for license 2,50,000.00
10,00,000.00
Goodwill    2,00,000.00
Journal Entries
Cash and Receivable    1,00,000.00                    -  
Property & Equipment    9,25,000.00                    -  
Inventory    2,00,000.00                    -  
License    2,75,000.00                    -  
Goodwill    2,00,000.00                    -  
To Current Liabilities                    -      1,50,000.00
To Notes Payable                    -      3,50,000.00
To Purchase Consideration                    -   12,00,000.00
Purchase Consideration 12,00,000.00
To Equity Investment                    -   12,00,000.00
Consolidated Balance Sheet
Assets
Current Assets
Cash & Receivable    9,00,000.00
Inventory    8,00,000.00
Non-current Assets
Property & Equipment 32,25,000.00
License    2,75,000.00
Intangible Asset
Goodwill    2,00,000.00
Total Assets 54,00,000.00
Liabilities and Shareholder's Equity
Current Liabilities    5,50,000.00
Other Liabilities    3,00,000.00
Non-current Liabilities
Notes payable    3,50,000.00
Shareholder's Equity
Common Stock 16,70,000.00
Retained Earnings 14,30,000.00
Additional Paid-in Capital 11,00,000.00
Total Liabilities and Equity 54,00,000.00
Consolidated Balance Sheet
Assets
Current Assets
Cash & Receivable    9,00,000.00
Inventory    8,00,000.00
Non-current Assets
Property & Equipment 32,25,000.00
License    2,75,000.00
Intangible Asset
Goodwill    2,00,000.00
Total Assets 54,00,000.00
Liabilities and Shareholder's Equity
Current Liabilities    5,50,000.00
Other Liabilities    3,00,000.00
Non-current Liabilities
Notes payable    3,50,000.00
Shareholder's Equity
Common Stock 16,70,000.00
Retained Earnings 14,30,000.00
Additional Paid-in Capital 11,00,000.00
Total Liabilities and Equity 54,00,000.00
Add a comment
Know the answer?
Add Answer to:
need help... please fix the errors as soon as possible. Thanks in advance! Pushdown Accounting Assume...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • need help asap... please fix the errors asap Pushdown Accounting Assume a parent company acquires its...

    need help asap... please fix the errors asap Pushdown Accounting Assume a parent company acquires its subsidiary by paying $1,200,000 for all of the outstanding voting shares of the investee. On the acquisition date, subsidiary's assets and liabilities have individual fair values that equal their book values, except for property equipment with a fair value greater than book value by $150,000 and license with a fair value greater than book value by $250,000. The parent and subsidiary have the following...

  • Consolidation at date of acquisition (purchase price equals book value) 59. Consolidation at date of acquisition...

    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...

  • Determining ending balances of accounts on the consolidated balance sheet Assume that the parent company acquires...

    Determining ending balances of accounts on the consolidated balance sheet Assume that the parent company acquires its subsidiary by exchanging 55,000 shares of its Common Stock, with a market value on the acquisition date of $40 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 a building that it feels is...

  • Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries Assume that...

    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...

  • man L03 43. Determining ending consolidated balances in the second year following the acquisition-Cost method Assume...

    man L03 43. Determining ending consolidated balances in the second year following the acquisition-Cost method Assume a parent company acquired a subsidiary on January 1, 2018. for $1.200,000. The purchase price was $650,000 in excess of the subsidiary's $550,000 book value of Stockholders' Equity on the acquisi tion date. Of this excess purchase price, $250,000 was assigned to Property, plant and equipment with a remaining economic useful life of 10 years, and $400,000 was assigned to Goodwill. On the acquisition...

  • Determining ending consolidated balances in the third year following the acquisition—Equity method Assume that your company...

    Determining ending consolidated balances in the third year following the acquisition—Equity method Assume that your company acquired a subsidiary on January 1, 2017. The purchase price was $900,000 in excess of the subsidiary’s book value of Stockholders’ Equity on the acquisition date, and that excess was assigned to the following [A] assets: [A] Asset Original Amount Original Useful Life Patent $600,000 10 years Goodwill 300,000 Indefinite $900,000 The [A] assets with a useful life have been amortized as part of...

  • Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries Assume that...

    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...

  • Determining ending consolidated balances in the third year following the acquisition-Equity method Assume that your company...

    Determining ending consolidated balances in the third year following the acquisition-Equity method Assume that your company acquired a subsidiary on January 1, 2017. The purchase price was $1,000,000 in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date, and that excess was assigned to the following [A] assets: Original Original [A] Asset Amount Useful Life Patent $700,000 10 years Goodwill 300,000 indefinite $1,000,000 The [A] assets with a useful life have been amortized as part of...

  • Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume ...

    Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $620,800. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an: unrecorded Patent that the parent valued...

  • Determining ending balances of accounts on the consolidated balance sheet Assume that the parent company acquires...

    Determining ending balances of accounts on the consolidated balance sheet Assume that the parent company acquires its subsidiary by exchanging 82,500 shares of its Common Stock, with a market value on the acquisition date of $40 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 a building that it feels is...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT