Assets Liabilities and Equity $ 120,000 200,000 Bonds payable 100,000 $ 200,000 400,000 Cash equivalents . Current liabilities . Inventory Land. Common stock ($5 par). . Paid-in capital in excess of par Retained earnings .. Total liabilities and equity 100,000 150,000 Building (net) . Equipment (net) 450,000 230,000 250,000 Total assets. $1,100,000 $1,100,000 ......
Quail Company purchases 80% of the common stock of Commo Company for $800,000. At the time of the purchase, Commo has the following balance sheet: (see attachment)
The fair values of assets are as follows:
Cash equivalents . . . . . . . . . . . . . . . . . . $120,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . 250,000
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . 650,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . 200,000
1. Prepare the value analysis schedule and the determination and distribution of excess schedule under three alternatives for valuing the NCI:
a. The value of the NCI is implied by the price paid by the parent for the controlling interest.
b. The market value of the shares held by the NCI is $45 per share.
c. The international accounting option, which does not allow
2. Prepare the elimination entries that would be made on a consolidated worksheet prepared on the date of purchase under the three alternatives for valuing the NCI:
a. The value of the NCI is implied by the price paid by the parent for the controlling interest.
b. The market value of the shares held by the NCI is $45 per share.
c. The international accounting option, which does not allow goodwill to be recorded as part of the NCI, is used.
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