Mercedes Co. acquired all of the common stock of Tesla Co. on January 1, 2018. As of that date, Tesla had the following trial balance: Book Value Fair Value Current Assets $50,000 $50,000 Land $50,000 $100,000 Buildings (20 years) $200,000 $300,000 Equipment(10 years) $100,000 $80,000 Net Income year ended 12/31/18 $100,000 Dividends year ended 12/31/18 $10,000 Common Stock-Tesla ($10 par value) $50,000 Additional Paid-In Capital (5,000 shares outstanding) $250,000 Retained Earnings, 1/1/18 $100,000 Assume that Mercedes Co. acquired the common stock of Tesla for $600,000 in cash. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to goodwill. Mercedes is using the equity method for this investment. NOTE: You will get no credit if I can’t read your answer.: (P3i) Prepare the S Entry for 12/31/2018 (Write the journal entry, print the name of the account(s) and write the dollar amounts clearly.) (Show below all calculations to get full credit.) (P3ii) Prepare the I Entry for 12/31/2018 (Write the journal entry, print the name of the account(s) and write the dollar amounts clearly.) (Show below all calculations to get full credit.)
Mercedes Co. acquired all of the common stock of Tesla Co. on January 1, 2018. As of that date, Tesla had the following trial balance: Book Value Fair Value Current Assets $50,000 $50,000 Land $50,000 $100,000 Buildings (20 years) $200,000 $300,000 Equipment(10 years) $100,000 $80,000 Net Income year ended 12/31/18 $100,000 Dividends year ended 12/31/18 $10,000 Common Stock-Tesla ($10 par value) $50,000 Additional Paid-In Capital (5,000 shares outstanding) $250,000 Retained Earnings, 1/1/18 $100,000 Assume that Mercedes Co. acquired the common stock of Tesla for $600,000 in cash. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to goodwill. Mercedes is using the equity method for this investment. NOTE: You will get no credit if I can’t read your answer.: (P3i) Prepare the S Entry for 12/31/2018 (Write the journal entry, print the name of the account(s) and write the dollar amounts clearly.) (Show below all calculations to get full credit.) (P3ii) Prepare the I Entry for 12/31/2018 (Write the journal entry, print the name of the account(s) and write the dollar amounts clearly.) (Show below all calculations to get full credit.)
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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Mercedes Co. acquired all of the common stock of Tesla Co. on January 1, 2018. As of that date, Tesla had the following trial balance : Book Value Fair Value Current Assets $50,000 $50,000 Land $50,000 $100,000 Buildings (20 years) $200,000 $300,000 Equipment(10 years) $100,000 $80,000 Net Income year ended 12/31/18 $100,000 Dividends year ended 12/31/18 $10,000 Common Stock-Tesla ($10 par value) $50,000 Additional Paid-In Capital (5,000 shares outstanding) $250,000 Retained Earnings , 1/1/18 $100,000 Assume that Mercedes Co. acquired the common stock of Tesla for $600,000 in cash. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to goodwill . Mercedes is using the equity method for this investment. NOTE: You will get no credit if I can’t read your answer.: (P3i) Prepare the S Entry for 12/31/2018 (Write the journal entry , print the name of the account(s) and write the dollar amounts clearly.) (Show below all calculations to get full credit.) (P3ii) Prepare the I Entry for 12/31/2018 (Write the journal entry, print the name of the account(s) and write the dollar
amounts clearly.) (Show below all calculations to get full credit.)
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