E4.14 Help please Equity Method Income and Working Paper Eliminations Pace acquired Saber on January 1,...
E4.14 Help please
Equity Method Income and Working Paper Eliminations
Pace acquired Saber on January 1, 2019, attributing its $200 million excess of acquisition cost over book value to identifiable intangible assets valued at $40 million, with a 5-year life, and to goodwill. At that time Saber’s shareholders’ equity was $2,000 million. It is now December 31, 2020, and consolidation entries are prepared. The investment account balance on January 1, 2020 was $2,286 million. Saber reported net income of $150 million in 2020. Goodwill is not impaired in either year.
Required:
a. What was Saber’s 2019 reported net income?
b. What was Saber’s shareholders’ equity on January 1, 2020?
c. Calculate Pace’s equity in net income of Saber for 2020, using the complete equity method.
d. Prepare the eliminating entries needed to consolidate Pace and Saber at December 31, 2020.
e. Assume it is now December 31, 2024. Total goodwill impairment as of January 1, 2024 is $100 million, and there is no impairment for 2024. Saber still owns the identifiable intangibles. Prepare consolidation eliminating entries (R) and (O) for 2024.
Homework Answers
Given that:
Pace acquired Saber on January 1, 2019, attributing its $200 million excess of acquisition cost over book value to identifiable intangible assets valued at $40 million, with a 5‑year life, and to goodwill.
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E4.14 Help please
Equity Method Income and Working Paper
Eliminations
Pace acquired Saber on January 1,...
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