Pennant Corporation acquired 80 percent of Saylor Company’s common stock for $20,000,000 in cash. At the date of acquisition, Saylor’s $5,000,000 of reported net assets were fairly stated, except land was overvalued by $200,000 and unrecorded developed technology was valued at $2,000,000. The estimated fair value of the noncontrolling interest is $4,000,000 at the acquisition date. Required: Calculate total goodwill and its allocation to the controlling and noncontrolling interests. Prepare the working paper eliminating entries needed to consolidate Pennant and Saylor at the date of acquisition.
Pennant Corporation acquired 80 percent of Saylor Company’s common stock for $20,000,000 in cash. At the date of acquisition, Saylor’s $5,000,000 of reported net assets were fairly stated, except land was overvalued by $200,000 and unrecorded developed technology was valued at $2,000,000. The estimated fair value of the noncontrolling interest is $4,000,000 at the acquisition date. Required: Calculate total goodwill and its allocation to the controlling and noncontrolling interests. Prepare the working paper eliminating entries needed to consolidate Pennant and Saylor at the date of acquisition.
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity
Section: Chapter Questions
Problem 37RQSC
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Pennant Corporation acquired 80 percent of Saylor Company’s common stock for $20,000,000 in cash. At the date of acquisition, Saylor’s $5,000,000 of reported net assets were fairly stated, except land was overvalued by $200,000 and unrecorded developed technology was valued at $2,000,000. The estimated fair value of the noncontrolling interest is $4,000,000 at the acquisition date.
Required:
- Calculate total
goodwill and its allocation to the controlling and noncontrolling interests. - Prepare the working paper eliminating entries needed to consolidate Pennant and Saylor at the date of acquisition.
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