Homework Answers
| a | The acquisition date fair value allocation schedule | |||
| Total | P company | Sub | ||
| Fair value paid for acquisition by P-80% | $750,000 | |||
| Fair value of noncontrolling interest | $180,000 | |||
| Total fair value | $930,000 | |||
| Less: Book value (common stock+Retained Earnings) | $380,000 | $304,000 | $76,000 | |
| Excess of fair value over book value | $550,000 | $446,000 | $104,000 | |
| Fair value allocation | ||||
| Land | $205,000 | $164,000 | $41,000 | |
| Building (10 years) | $120,000 | $96,000 | $24,000 | |
| Trademark | $100,000 | $80,000 | $20,000 | |
| Bonds Payable | ($15,000) | ($12,000) | ($3,000) | |
| Goodwill | $140,000 | $118,000 | $22,000 | |
| b | Elimination entries as of the acquisition date | |||
| Date | Description | Debit | Credit | |
| Common Stock | $140,000 | |||
| Retained Earnings | $240,000 | |||
| Investment in S | 304000 | |||
| Non-controlling Interest | 76000 | |||
| (To eliminate subsidiary common stock and retained earnings) | ||||
| Land | $205,000 | |||
| Building (10 years) | $120,000 | |||
| Trademark | $100,000 | |||
| Goodwill | $140,000 | |||
| Bonds Payable | $15,000 | |||
| Investment in S | $446,000 | |||
| Non-controlling Interest | $104,000 | |||
| (To record excess fair value allocation) | ||||
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