Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2020, by issuing 10,000 shares of its value common stock (having a fair value of $19.50 per share). As of that date, Bradford had stockholders' equity totaling $145 Land shown on Bradford's accounting records was undervalued by $10,700. Equipment (with a five-year remaining life) was undervalued by $6,850. A secret formula developed by Bradford was appraised at $32,000 with an estimated life of 20 year The following are the separate financial statements for the two companies for the year ending December 31, 2024. There we intra-entity payables on that date. Credit balances are indicated by parentheses. Accounts Revenues Cost of goods sold Depreciation expense Equity in subsidiary earnings Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings ,12/31/24 Current assets Investment in Bradford Company Land Buildings and equipment (net) Total assets Current liabilities Common stock Additional paid-in capital Retained earnings, 12/31/24 Total liabilities and equity Allen Company $ (653,000) 216,000 135,000 (69,630) $ (371,630) $ (792,000) (371,630) 175,500 $ (988,130) $ 454,000 237,300 430,000 814,000 $ 1,935,300 $ (257,170) (600,000) (90,000) (988,130) (1,935,300) $ Bradford Company $ (212,500) 79,000 60,900 0 $ (72,600) $ (105,000) (72,600) 40,000 $ (137,600) $ 99,000 0 66,600 182,000 $ 347,600 $ (145,000) (60,000) (5,000) (137,600) (347,600) $ Required: 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.
Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2020, by issuing 10,000 shares of its value common stock (having a fair value of $19.50 per share). As of that date, Bradford had stockholders' equity totaling $145 Land shown on Bradford's accounting records was undervalued by $10,700. Equipment (with a five-year remaining life) was undervalued by $6,850. A secret formula developed by Bradford was appraised at $32,000 with an estimated life of 20 year The following are the separate financial statements for the two companies for the year ending December 31, 2024. There we intra-entity payables on that date. Credit balances are indicated by parentheses. Accounts Revenues Cost of goods sold Depreciation expense Equity in subsidiary earnings Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings ,12/31/24 Current assets Investment in Bradford Company Land Buildings and equipment (net) Total assets Current liabilities Common stock Additional paid-in capital Retained earnings, 12/31/24 Total liabilities and equity Allen Company $ (653,000) 216,000 135,000 (69,630) $ (371,630) $ (792,000) (371,630) 175,500 $ (988,130) $ 454,000 237,300 430,000 814,000 $ 1,935,300 $ (257,170) (600,000) (90,000) (988,130) (1,935,300) $ Bradford Company $ (212,500) 79,000 60,900 0 $ (72,600) $ (105,000) (72,600) 40,000 $ (137,600) $ 99,000 0 66,600 182,000 $ 347,600 $ (145,000) (60,000) (5,000) (137,600) (347,600) $ Required: 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.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 24E
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Transcribed Image Text:Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2020, by issuing 10,000 shares of its $10 par
value common stock (having a fair value of $19.50 per share). As of that date, Bradford had stockholders' equity totaling $145,450.
Land shown on Bradford's accounting records was undervalued by $10,700. Equipment (with a five-year remaining life) was
undervalued by $6,850. A secret formula developed by Bradford was appraised at $32,000 with an estimated life of 20 years.
The following are the separate financial statements for the two companies for the year ending December 31, 2024. There were no
intra-entity payables on that date. Credit balances are indicated by parentheses.
Accounts
Revenues
Cost of goods sold
Depreciation expense
Equity in subsidiary earnings
Net income
Retained earnings, 1/1/24
Net income (above)
Dividends declared
Retained earnings ,12/31/24
Current assets
Investment in Bradford Company
Land
Buildings and equipment (net)
Total assets
Current liabilities
Common stock
Additional paid-in capital
Retained earnings, 12/31/24
Total liabilities and equity
Allen Company
$ (653,000)
216,000
135,000
(69,630)
$ (371,630)
$ (792,000)
(371,630)
175,500
$ (988,130)
$ 454,000
237,300
430,000
814,000
$ 1,935,300
$ (257,170)
(600,000)
(90,000)
(988,130)
(1,935,300)
$
Bradford
Company
$
(212,500)
79,000
60,900
0
$ (72,600)
$
(105,000)
(72,600)
40,000
$
(137,600)
$ 99,000
0
66,600
182,000
$ 347,600
$
(145,000)
(60,000)
(5,000)
(137,600)
$
(347,600)
Required:
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.
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