Homework Answers
| Part A | Computation and Allocation of Difference Schedule | |||
| Parent Share | Non- Controlling Share | Entire Value | ||
| Purchase price and implied value | $ 2,340,000 | $ 260,000 | $ 2,600,000 * | |
| Less: Book value of equity acquired | $ 2,430,000 | $ 270,000 | $ 2,700,000 | |
| Difference between implied and book value | $ (90,000) | $ (10,000) | $ (100,000) | |
| Inventory | $ (54,000) | $ (6,000) | $ (60,000) | |
| Land | $ (270,000) | $ (30,000) | $ (300,000) | |
| Equipment (net) | $ (162,000) | $ (18,000) | $ (180,000) | |
| Balance (excess of FV over implied value) | $ (576,000) | $ (64,000) | $ (640,000) | |
| Gain | $ 576,000 | |||
| Increase Non controlling interest to fair value of assets | $ 64,000 | |||
| Total allocated bargain | $ 640,000 | |||
| Balance | -0- | -0- | -0- | |
| *$2,340,000/.90 | ||||
| Part B (1) | Capital Stock- Standards Corp. | $ 1,650,000 | ||
| Beginning Retained Earnings-Standards Corp. | $ 1,050,000 | |||
| Difference between Implied and Book Value | $ 100,000 | |||
| Investment in Standards Corp. | $ 2,340,000 | |||
| Noncontrolling Interest | $ 260,000 | |||
| (2) | Difference between Implied and Book Value | $ 100,000 | ||
| Inventory | $ 60,000 | |||
| Current Assets | $ 300,000 | |||
| Equipment (net) | $ 180,000 | |||
| Gain on Acquisition | $ 576,000 | |||
| Non controlling interest | $ 64,000 | |||
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Problem #1 Phillins Company purchased a un interest in Standards Corporation for $2.340,000 on January 1. 2018. Sta...
Muscat Company purchased a 90% interest in Dhofar Corporation for O.R. 2,340,000 on January 1, 2013. Dhofar Corporation...
Muscat Company purchased a 90% interest in Dhofar Corporation for O.R. 2,340,000 on January 1, 2013. Dhofar Corporation had O.R. 1,650,000 of common stock and O.R. 1,050,000 of retained earnings on that date. The following values were determined for Dhofar Corporation on the date of purchase: Book Value Fair Value Inventory O. R 240,000 O.R 300,000 Land 2,400,000 2,700,000 Equipment 1,620,000 1,800,000 Instructions: 1. Prepare the January 1, 2013, workpaper entries to eliminate the investment account and allocate the difference...
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...
On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $1,997,000. At that time Sharp Compa...
On January 1, 2013, Point Corporation acquired an 80% interest
in Sharp Company for $1,997,000. At that time Sharp Company had
common stock of $1,516,000 and retained earnings of $702,000. The
book values of Sharp Company’s assets and liabilities were equal to
their fair values except for land and bonds payable. The land had a
fair value of $99,000 and a book value of $81,000. The outstanding
bonds were issued at par value on January 1, 2008, pay 9% annually,...
Problem #2 Pullman Corporation acquired a 90% interest in Sleeter Company for $6,500,000 on January 1...
Problem #2 Pullman Corporation acquired a 90% interest in Sleeter Company for $6,500,000 on January 1 2018. At that time Sleeter Company had common stock of $4,500,000 and retained earnings of $1,800,000. The balance sheet information available for Sleeter Company on January 1, 2018, showed the following: Inventory (FIFO) Equipment (net) Land Book Value $1,300.000 1.500.000 3.000.000 Fair Value $1,500,000 1,900,000 3,000,000 The equipment had a remaining useful life of ten years. Sleeter Company reported S240,000 of net income in...
* Exercise 5-15 A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January...
* Exercise 5-15 A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2014. The common stock balance of Saxton Corporation was $2,953,800 on this date, and the balance in retained earnings was The cost of the investment to Palm Incorporated was $3,774,000. The balance sheet information available for Saxton Corporation on the acquisition date revealed these values: Inventory (FIFO) Equipment (net) Land Book Value $687,400 1,988,100 1,630,600 Fair Value $798,200 1,988,100 1,961,300 The equipment was...
5-1 and 5-2 CISE 5-1 interest in Shaw Company for $540,000 Allocation of Cost LO 1...
5-1 and 5-2
CISE 5-1 interest in Shaw Company for $540,000 Allocation of Cost LO 1 LO3 On January 1, 2018, Pam Company purchased an 85% interest in Shaw Company On this date, Shaw Company had common stock of $400,000 and retained carnings of An examination of Shaw Company's assets and liabilities revealed that the equal to their fair value except for marketable securities and equipment: assets and liabilities revealed that their book value was Book Value Fair Value Marketable...
Exercise 5-9 On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for...
Exercise 5-9 On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $1,986,000. At that time Sharp Company had common stock of $1,511,000 and retained earnings of $709,000. The book values of Sharp Company's assets and liabilities were equal to their fair values except for land and bonds payable. The land had a fair value of $98,000 and a book value of $79,000. The outstanding bonds were issued at par value on January 1, 2008, pay...
Exercise 5-3 Pace Company purchased 20,000 of the 25,000 shares of Saddler Corporation for $522,100. On...
Exercise 5-3 Pace Company purchased 20,000 of the 25,000 shares of Saddler Corporation for $522,100. On January 3, 2014, the acquisition date, Saddler Corporation's capital stock and retained earnings account balances were $494,200 and $98,500, respectively. The following values were determined for Saddler Corporation on the date of purchase: Inventory Other current assets Marketable securities Plant and equipment Book Value $49,700 201,500 100,800 295,400 Fair Value $69,000 201,500 126,500 326,700 (b) Prepare a Computation and Allocation Schedule for the difference...
Problem 3 Pennington Corporation purchased 80% of the votine common stock of Stafford Corporation for $3,200,000...
Problem 3 Pennington Corporation purchased 80% of the votine common stock of Stafford Corporation for $3,200,000 cash on January 1, 2016. On this date the book values and fair values of Stafford Corporation's assets and liabilities were as follows: Book Value Fair Value Cash $ 70,000 $ 70,000 Receivables 240,000 240,000 Inventories 600,000 700.000 Other Current Assets 340.000 405,000 Land 600,000 720,000 Buildings -net 1,050,000 1.920,000 Equipment - net 850,000 750,000 $3.750,000 $4.805.000 $250,000 670.000 Accounts Payable Other Liabilities Capital...
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 $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...
On January 1, 2013, Point Corporation acquired an 80% interest
in Sharp Company for $1,997,000. At that time Sharp Company had
common stock of $1,516,000 and retained earnings of $702,000. The
book values of Sharp Company’s assets and liabilities were equal to
their fair values except for land and bonds payable. The land had a
fair value of $99,000 and a book value of $81,000. The outstanding
bonds were issued at par value on January 1, 2008, pay 9% annually,...
Problem #2 Pullman Corporation acquired a 90% interest in Sleeter Company for $6,500,000 on January 1 2018. At that time Sleeter Company had common stock of $4,500,000 and retained earnings of $1,800,000. The balance sheet information available for Sleeter Company on January 1, 2018, showed the following: Inventory (FIFO) Equipment (net) Land Book Value $1,300.000 1.500.000 3.000.000 Fair Value $1,500,000 1,900,000 3,000,000 The equipment had a remaining useful life of ten years. Sleeter Company reported S240,000 of net income in...
* Exercise 5-15 A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2014. The common stock balance of Saxton Corporation was $2,953,800 on this date, and the balance in retained earnings was The cost of the investment to Palm Incorporated was $3,774,000. The balance sheet information available for Saxton Corporation on the acquisition date revealed these values: Inventory (FIFO) Equipment (net) Land Book Value $687,400 1,988,100 1,630,600 Fair Value $798,200 1,988,100 1,961,300 The equipment was...
5-1 and 5-2
CISE 5-1 interest in Shaw Company for $540,000 Allocation of Cost LO 1 LO3 On January 1, 2018, Pam Company purchased an 85% interest in Shaw Company On this date, Shaw Company had common stock of $400,000 and retained carnings of An examination of Shaw Company's assets and liabilities revealed that the equal to their fair value except for marketable securities and equipment: assets and liabilities revealed that their book value was Book Value Fair Value Marketable...
Exercise 5-9 On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $1,986,000. At that time Sharp Company had common stock of $1,511,000 and retained earnings of $709,000. The book values of Sharp Company's assets and liabilities were equal to their fair values except for land and bonds payable. The land had a fair value of $98,000 and a book value of $79,000. The outstanding bonds were issued at par value on January 1, 2008, pay...
Exercise 5-3 Pace Company purchased 20,000 of the 25,000 shares of Saddler Corporation for $522,100. On January 3, 2014, the acquisition date, Saddler Corporation's capital stock and retained earnings account balances were $494,200 and $98,500, respectively. The following values were determined for Saddler Corporation on the date of purchase: Inventory Other current assets Marketable securities Plant and equipment Book Value $49,700 201,500 100,800 295,400 Fair Value $69,000 201,500 126,500 326,700 (b) Prepare a Computation and Allocation Schedule for the difference...
Problem 3 Pennington Corporation purchased 80% of the votine common stock of Stafford Corporation for $3,200,000 cash on January 1, 2016. On this date the book values and fair values of Stafford Corporation's assets and liabilities were as follows: Book Value Fair Value Cash $ 70,000 $ 70,000 Receivables 240,000 240,000 Inventories 600,000 700.000 Other Current Assets 340.000 405,000 Land 600,000 720,000 Buildings -net 1,050,000 1.920,000 Equipment - net 850,000 750,000 $3.750,000 $4.805.000 $250,000 670.000 Accounts Payable Other Liabilities Capital...
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....
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