Question

AutoSave OFF QEU = Pepper & Salsa Year 3 Workpaper (2) View Tell me Home Insert Draw Page Layout Formulas Data Review Share Comments Arial v 22 vi A General I A7 4 Conditional Formatting 12 Format as Table & Cell Styles v vo LİL Insert X Delete v Format v TV Paste B I U BV Ideas $ % ) Sensitivity Sort & Filter Find & Select A35 fix On December 31, Year 1, Pepper Company acquired 100% of the common stock of Salsa Company, at book value, by Issuing 15,000 shares of Pepe's $2 par common A N Salsa Company 180.000 G Consolidation Entries Dobit Credit Item Sales 4 Income from Subsidiary G Cost of Goods Sold 6 Depreciation and Amortization 7 Other Expenses Pepper Company 836,000 (19,000) 476,000 70,000 Consolidated 1,016,000 (19,000) 574.000 20.000 90,000 281,000 180,000 B1,000 91,000 (19.000) 72,000 10 Net Income 11 12 Retained Earnings, January 1 13 Net Income # Dividends Declared 345,000 91,000 45,000 155.000 (19.000) 8,000 500,000 72,000 15 53,000 519,000 391,000 128.000 18 Retained Earnings, December 31 17 16 Current Assels Te Buildings & Equipment 20 Land 21 Investment in Salsa Co Stock 482,000 520,000 175,000 328,000 275.000 310,000 50.000 757,000 830,000 225,000 254,000 1,759,000 92.000 727.000 328,000 346,000 2,486,000 20 Other Assets 24 Total Debits 25 28 Accumulated Depreciation 27 Accounts Payable 28 Bonds Payable 2e Common Stock 30 Additional Paid-In Capital 31 Retained Earnings 32 Total Credits 238,000 100,000 180,000 150 000 700,000 391,000 113.000 136,000 150.000 20,000 180.000 128.000 727,000 351,000 235,000 330,000 170,000 880,000 519,000 2,486,000 1,759.000 0 0 33 On December 31, Year 1, Pepper Company acquired 100% of the common stock of Salsa Comnany at book value by issuing 15.000 shares of Pene's $2.nar common 12-31-X3 + Use the mouse to apply the copied format to another object Elu + 75%

Answer 1

Answer:

Calculation of Goodwill or Gain on bargain purchase

Consideration Treansferred
Investment in Salsa	328000
Issued 15000 shares of $ 2 each	30000
Total Consideration		358000
Less: Fair value of identifiable net assets
Additional paid-in Capital	180000
Retained Earnings	128000
Common Stock	20000
Net Identifiable Assets of slsa		328000
Goodwill		30000

Journal Entry

Net Assets	20000
Goodwill	10000
To Investmet in Salsa		30000
(Being 100% investment made in Salsa by issuning 15000 shares of $ 2 each)

Consolodated Balance Sheet Pape as at 31 December

Assets	$
Current Assets (482000+275000)	757000
Non-current Assets
Building & Equipment (520000+310000) 830000
Less: Accumulated Depreciation ( 238000+113000) -351000	479000
Land(175000+50000)	225000
Goodwill	30000
Other Assets ( 254000 + 92000)	346000
Total	1837000
Liabilities ans Shareholder's Equity
Current Liabilities
Accounts Payable (100000 + 136000)	236000
Non-current Liabilities
Bonds Payable (180000 + 150000)	330000
Shareholder's Equity
Common Stock	180000
Additional pain in capital	700000
Retained Earnings	391000
Total	1837000