P company purchased a 70% interest in S company on January 1, 2015 for $3,000,000. The book value...
P company purchased a 70% interest in S company on January 1, 2015 for $3,000,000. The book value and fair value of the assets and liabilities of S company on that day were:
BOOK VALUE FAIR VALUE
Current assets $700,000 700,000
Equipment 1,600,000 2,000,000
Land 500,000 700,000
Deferred charge 400,000 400,000
Total Assets 3,200,000 3,800,000
Less: Liabilities (700,000) (700,000)
Net Assets: 2,500,000 3,100,000
The equipment had a remaining useful life of 8 years on January 1, 2015 and the deferred charge was being amortized over a period of 8 years from that date. C/S was $1,700,000 and Retained Earnings was $110,000 on that same date. P company uses partial-equity method to record its investment within S company.
Create the December 31, 2015 WORK PAPER ENTRIES that:
- Eliminate the investment account
- Allocate and amortize the difference between implied value and book value
Homework Answers
| Computation of Cost of Control on 01-01-2015 | ||||
| Particulars | $ | |||
| Investment (70%) | 3,000,000 | |||
| Less: Common stock | (1,190,000) | |||
| Less: Retained Earnings | (77,000) | |||
| Goodwill | 1,733,000 | |||
| Computation of Cost of Control on 01-01-2015 | ||||
| Particulars | $ | |||
| Investment (70%) | 3,000,000 | |||
| Less: Current Assets | (490,000) | |||
| Equipment | (1,120,000) | |||
| Land | (350,000) | |||
| Add: Liabilities | 490,000 | |||
| Goodwill | 1,530,000 | |||
| Calculation of Allocation of Difference between Implied Value and Book Value | ||||
| Particulars | Basis of Allocation | Goodwill | Life | Amortization |
| Current Assets | 700,000 | 510,000 | 8 | 63,750 |
| Equipment | 1,600,000 | 1,165,714 | 8 | 145,714 |
| Land | 500,000 | 364,286 | 8 | 45,536 |
| Less: Liabilities | (700,000) | (510,000) | 8 | (63,750) |
| Total | 2,100,000 | 1,530,000 | 191,250 | |
Add Answer to:
P company purchased a 70% interest in S company on January 1, 2015 for $3,000,000. The book value...
P company purchased 85% interest in S company for $7,500,000 on January 1, 2016. S company had c/...
P company purchased 85% interest in S company for $7,500,000 on January 1, 2016. S company had c/s of $5,000,000 and R/E of $2,300,000 on that date. The B/S on that date contained: Book Value Fair Value Inventory $1,500,000 1,700,000 Equipment 1,700,000 2,100,000 Land 3,500,000 3,300,000 The equipment had a useful life of 12 years with straight-line depreciation and inventory will be sold w/in the year. S company had $450,000 of net income in 2016 and declared $100,000 of dividends...
P company purchased 85% interest in S company for $7,500,000 on January 1, 2016, s company had c/...
p company purchased 85% interest in S company for $7,500,000 on January 1, 2016, s company had c/s of $5,000,000 and R/E of $2,300,000 on that date. The B/S on that date contained: Book Value Inventory$1,500,000 Equipment 1,700,000 Land 1,700,000 2,100,000 3,300,000 3,500,000 The equipment had a useful life of 12 years with straight-line depreciation and inventory will be sold w/in the year. S company had $450,000 of net income in 2016 and declared $100,000 of dividends for the year....
Exercise 5-4 On January 1, 2015, Porter Company purchased an 80% interest in Salem Company for...
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 $30,000 50,600 305,800 199,100 Fair Value $35,200 54,300 356,100 199,100 (b) Prepare the January 1, 2015, consolidated financial statements workpaper entries to eliminate...
Exercise 5-4 On January 1, 2015, Porter Company purchased an 80% interest in Salem Company for...
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...
On January 1, Year 1, Parent bought a 55% interest in Sub. Parent paid for the...
On January 1, Year 1, Parent bought a 55% interest in Sub. Parent paid for the transaction with $3 million cash and 500,000 shares of Parent common stock (par value $1 per share; fair value $14.90 per share). At the time of the acquisition, Sub's book value was $16,970,000. On the date of purchase, fair values of Sub's assets differed from book values as follows: Land Book Value $1,700,000 2,700,000 3,700,000 Fair Value $2,550,000 3,400,000 3,300,000 Buildings (7-yr life) Equipment...
On January 1, 2015, P Corporation acquired 70 percent of Sea-Gull Company's common stock for $150...
On January 1, 2015, P Corporation acquired 70 percent of Sea-Gull Company's common stock for $150,000 cash. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: P Cor S Cor Cash 160,000 80,000 100,000 10,000 220,000 100,000 150,000 $620,000 30,000 10,000 30,000 30,000 190,000 20,000 0 270,000 Invento Goodwill PP&E Investment in sub Total Assets Bonds Pavable Common Stock Retained Earnings Total Liabilities & 180,000 90,000 100,000 250,000 25,000 70,000...
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...
TUDIN #2 2016 for company purchased 80% of the outstanding common stock of S Company on January 2, 2016, for $380,0...
TUDIN #2 2016 for company purchased 80% of the outstanding common stock of S Company on January 2, 2016, for $380,000. Balance sheets for P Company and follows: ce sheets for P Company and S Company immediately after the stock acquisition were as Current assets Investment in S Company Plant and equipment (net) Land P Company $ 166,000 380,000 560,000 40,000 $1,146,000 S Company $ 96,000 -0- 224.000 120,000 $440,000 Current liabilities Long-term notes payable Common stock Other contributed capital...
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 $541,800. On this date, Shaw Company had common stock
of $398,100 and retained earnings of $143,700.
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
Fair Value
Marketable securities
$19,800
$44,600
Equipment (net)
120,200
140,000
(a)
Prepare a Computation and Allocation Schedule for the difference
between...
QUESTION N6 Capital Assets ealeulating Book Value and disposal Extra Cor purchased a machine on January 1". 2015....
QUESTION N6 Capital Assets ealeulating Book Value and disposal Extra Cor purchased a machine on January 1". 2015. The machine was purchased in the mount of $920,000. It was expected to have a salvage value of $20,000 at the end of ten years. 1e Company uses straight line depreciation to amortize assets. Prepare the journal entry to record Depreciation expense on December 31" for the year of 2024. Calculations Space for journal entry provided on the next page. Debit Credit...
p company purchased 85% interest in S company for $7,500,000 on January 1, 2016, s company had c/s of $5,000,000 and R/E of $2,300,000 on that date. The B/S on that date contained: Book Value Inventory$1,500,000 Equipment 1,700,000 Land 1,700,000 2,100,000 3,300,000 3,500,000 The equipment had a useful life of 12 years with straight-line depreciation and inventory will be sold w/in the year. S company had $450,000 of net income in 2016 and declared $100,000 of dividends for the year....
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 $30,000 50,600 305,800 199,100 Fair Value $35,200 54,300 356,100 199,100 (b) Prepare the January 1, 2015, consolidated financial statements workpaper entries to eliminate...
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...
On January 1, Year 1, Parent bought a 55% interest in Sub. Parent paid for the transaction with $3 million cash and 500,000 shares of Parent common stock (par value $1 per share; fair value $14.90 per share). At the time of the acquisition, Sub's book value was $16,970,000. On the date of purchase, fair values of Sub's assets differed from book values as follows: Land Book Value $1,700,000 2,700,000 3,700,000 Fair Value $2,550,000 3,400,000 3,300,000 Buildings (7-yr life) Equipment...
On January 1, 2015, P Corporation acquired 70 percent of Sea-Gull Company's common stock for $150,000 cash. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: P Cor S Cor Cash 160,000 80,000 100,000 10,000 220,000 100,000 150,000 $620,000 30,000 10,000 30,000 30,000 190,000 20,000 0 270,000 Invento Goodwill PP&E Investment in sub Total Assets Bonds Pavable Common Stock Retained Earnings Total Liabilities & 180,000 90,000 100,000 250,000 25,000 70,000...
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...
TUDIN #2 2016 for company purchased 80% of the outstanding common stock of S Company on January 2, 2016, for $380,000. Balance sheets for P Company and follows: ce sheets for P Company and S Company immediately after the stock acquisition were as Current assets Investment in S Company Plant and equipment (net) Land P Company $ 166,000 380,000 560,000 40,000 $1,146,000 S Company $ 96,000 -0- 224.000 120,000 $440,000 Current liabilities Long-term notes payable Common stock Other contributed capital...
Exercise 5-1
On January 1, 2013, Pam Company purchased an 85% interest in Shaw
Company for $541,800. On this date, Shaw Company had common stock
of $398,100 and retained earnings of $143,700.
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
Fair Value
Marketable securities
$19,800
$44,600
Equipment (net)
120,200
140,000
(a)
Prepare a Computation and Allocation Schedule for the difference
between...
QUESTION N6 Capital Assets ealeulating Book Value and disposal Extra Cor purchased a machine on January 1". 2015. The machine was purchased in the mount of $920,000. It was expected to have a salvage value of $20,000 at the end of ten years. 1e Company uses straight line depreciation to amortize assets. Prepare the journal entry to record Depreciation expense on December 31" for the year of 2024. Calculations Space for journal entry provided on the next page. Debit Credit...
Most questions answered within 3 hours.
-
An optical disk drive in your computer can spin a disk up to
10,000 rpm (about...
asked 47 seconds ago -
Is the purpose of lightning rods to attract lightning?
asked 9 minutes ago -
Let A be an event included in S that is independent of itself.
Then we have:...
asked 8 minutes ago -
The Adverse Childhood Experiences (ACE) Study has had a great
impact on moving psychologists to be...
asked 6 minutes ago -
Write a paper on: Assume that you have been assigned as the
project manager for a...
asked 10 minutes ago -
You plan to save $5,700 per year for the next 10 years. After
the last deposit,...
asked 43 minutes ago -
On January 1, 2019, ABC Corp. borrowed $81,000 by signing an
installment loan. The loan will be...
asked 47 minutes ago -
Enzyme X exhibits maximum activity at pH = 5.25. X shows a sharp
decrease in its...
asked 1 hour ago -
Postulate a reason for why so many aliphatic amino acids are
essential.
asked 1 hour ago -
Three samples were taken of 4 different dog food bags and their
weights were recorded:
Sample/Observation...
asked 1 hour ago -
The Beatles had 27 number one hits; a radio station asks
listeners to send in a...
asked 1 hour ago -
Help with Java Program Please
Create a simple graph class. The graph class should have the...
asked 1 hour ago