P Company acquired 90% of S Corporation on January 1, 2014 for $2,250,000. S had net assets at that time with a fair value of $2,500,000. At the time of the acquisition, Patterson computed the annual excess fair-value amortization to be $20,000, based on the difference between S's net book value and net fair value. Assume the fair value exceeds the book value, and $20,000 pertains to the whole company. Separate from any earnings from S, P reported net income in 2014 and 2015 of $550,000 and $575,000, respectively. Calculate the Investment in S shown on P's ledger at December 31, 2015. S reported the following net income and dividend payments: 2014 $150,000 2015 $180,000 Net Income Dividends $30,000 $30,000
P Company acquired 90% of S Corporation on January 1, 2014 for $2,250,000. S had net assets at that time with a fair value of $2,500,000. At the time of the acquisition, Patterson computed the annual excess fair-value amortization to be $20,000, based on the difference between S's net book value and net fair value. Assume the fair value exceeds the book value, and $20,000 pertains to the whole company. Separate from any earnings from S, P reported net income in 2014 and 2015 of $550,000 and $575,000, respectively. Calculate the Investment in S shown on P's ledger at December 31, 2015. S reported the following net income and dividend payments: 2014 $150,000 2015 $180,000 Net Income Dividends $30,000 $30,000
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 11E
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