Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2017, by Issuing 10,000 shares of Its $10 par value common stock (having a fair value of $17.50 per share). As of that date, Bradford had stockholders' equity totaling $112,150. Land shown on Bradford's accounting records was undervalued by $19.700. Equipment (with a five-year remaining life) was undervalued by $6.750. A secret formula developed by Bradford was appraised at $36.400 with an estimated life of 20 years. The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no Intra-entity payables on that date. Credit balances are indicated by parentheses. Allen Company Bradford Company $ (303,750) Revenues $ (521,000) Cost of goods sold Depreciation expense Subsidiary earnings Net Income 172,000 189,000 (131,080) 115,500 54,000 $ (291,080) Retained earnings, 1/1/21 Net income (above) $ (762,000) (291,080) 175,500 $(134,250) $ (103,500) (134,250) 40,000 Dividends declared Retained earnings,12/31/21 $ (877,580) $ (197,750) Current assets $ $ 101,500 374,000 309,750 e Investment in Bradford Company Land 574,000 854,000 86,100 186,000 Buildings and equipment (net) Total assets $ 2,111,750 $ 373,600 Current liabilities Common stock $ (544,170) (600,000) (90,000) (877,580) $ (110,850) (60,000) (5,000) (197,750) Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and equity $(2,111,750) $ (373,600) a-1. Complete the table to show the allocation of the fair value in excess of book value. a-2. Complete the table to show the computation for Subsidiary Earnings. b. Complete the worksheet by consolidating the financial Information for these two companies.
Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2017, by Issuing 10,000 shares of Its $10 par value common stock (having a fair value of $17.50 per share). As of that date, Bradford had stockholders' equity totaling $112,150. Land shown on Bradford's accounting records was undervalued by $19.700. Equipment (with a five-year remaining life) was undervalued by $6.750. A secret formula developed by Bradford was appraised at $36.400 with an estimated life of 20 years. The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no Intra-entity payables on that date. Credit balances are indicated by parentheses. Allen Company Bradford Company $ (303,750) Revenues $ (521,000) Cost of goods sold Depreciation expense Subsidiary earnings Net Income 172,000 189,000 (131,080) 115,500 54,000 $ (291,080) Retained earnings, 1/1/21 Net income (above) $ (762,000) (291,080) 175,500 $(134,250) $ (103,500) (134,250) 40,000 Dividends declared Retained earnings,12/31/21 $ (877,580) $ (197,750) Current assets $ $ 101,500 374,000 309,750 e Investment in Bradford Company Land 574,000 854,000 86,100 186,000 Buildings and equipment (net) Total assets $ 2,111,750 $ 373,600 Current liabilities Common stock $ (544,170) (600,000) (90,000) (877,580) $ (110,850) (60,000) (5,000) (197,750) Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and equity $(2,111,750) $ (373,600) a-1. Complete the table to show the allocation of the fair value in excess of book value. a-2. Complete the table to show the computation for Subsidiary Earnings. b. Complete the worksheet by consolidating the financial Information for these two companies.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
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Transcribed Image Text:Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2017, by Issuing 10,000 shares of its $10 par
value common stock (having a fair value of $17.50 per share). As of that date, Bradford had stockholders' equity totaling $112,150. Land
shown on Bradford's accounting records was undervalued by $19.700. Equipment (with a five-year remaining life) was undervalued by
$6,750. A secret formula developed by Bradford was appraised at $36,400 with an estimated life of 20 years.
The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no
Intra-entity payables on that date. Credit balances are indicated by parentheses.
Allen
Company
Revenues
$ (521,000)
Bradford
Company
$ (303,750)
115,500
54,000
e
Cost of goods sold
Depreciation expense
Subsidiary earnings
172,000
189,000
(131,080)
(291,080)
Net income
$
$ (134,250)
Retained earnings, 1/1/21
Net income (above)
$ (762,000)
(291,080)
175,500
$ (103,500)
(134,250)
40,000
Dividends declared
Retained earnings ,12/31/21
$ (877,580)
$ (197,750)
Current assets
$
101,500
$ 374,000
309,750
Investment in Bradford
Company
Land
574,000
854,000
86,100
186,000
Buildings and equipment (net)
Total assets
$ 2,111,750
$ 373,600
Current liabilities
Common stock
$
Additional paid-in capital
(544,170)
(600,000)
(90,000)
(877,580)
$ (110,850)
(60,000)
(5,000)
(197,750)
Retained earnings, 12/31/21
Total liabilities and equity
$(2,111,750)
$ (373,600)
a-1. Complete the table to show the allocation of the fair value in excess of book value.
a-2. Complete the table to show the computation for Subsidiary Earnings.
b. Complete the worksheet by consolidating the financial Information for these two companies.
Complete this question by entering your answers in the tabs below.
Req A1
Reg A2
Req B
Complete the table to show the allocation of the fair value in excess of book value.
Accounts
Amount
Life
Annual Excess
Amortizations
0
Req A2 >
Total
S
0
years
years
years
years
years
< Req A1
$
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