Prepare a value analysis schedule for this business combination. Check Number – Goodwill $40,000
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On December 31, 20X1, Parent Company purchased 80% of the common stock of Subsidiary Company for $280,000. On this date, Subsidiary had total owners' equity of $250,000 (common stock $20,000; other paid-in capital, $80,000; and
Required:
a. |
Prepare a value analysis schedule for this business combination. |
|
Check Number – Goodwill $40,000 |
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- On December 31, 20X1, Parent Company purchased 80% of the common stock of Subsidiary Company for $280,000. On this date, Subsidiary had total owners' equity of $250,000 (common stock $20,000; other paid-in capital, $80,000; and retained earnings, $150,000). Any excess of cost over book value is due to the under or overvaluation of certain assets and liabilities. Inventory is undervalued $5,000. Land is undervalued $20,000. Buildings and equipment have a fair value which exceeds book value by $30,000. Bonds payable are overvalued $5,000. The remaining excess, if any, is due to goodwill. Required: b. Prepare the determination and distribution schedule for this business combinationOn December 31, 20X1, Parent Company purchased 80% of the common stock of Subsidiary Company for $280,000. On this date, Subsidiary had total owners' equity of $250,000 (common stock $20,000; other paid-in capital, $80,000; and retained earnings, $150,000). Any excess of cost over book value is due to the under or overvaluation of certain assets and liabilities. Inventory is undervalued $5,000. Land is undervalued $20,000. Buildings and equipment have a fair value which exceeds book value by $30,000. Bonds payable are overvalued $5,000. The remaining excess, if any, is due to goodwill. b. Prepare the determination and distribution schedule for this business combination Check Number – Excess of FV over BV $100,000On December 31, 20X1, Parent Company purchased 80% of the common stock of Subsidiary Company for $280,000. On this date, Subsidiary had total owners' equity of $250,000 (common stock $20,000; other paid-in capital, $80,000; and retained earnings, $150,000). Any excess of cost over book value is due to the under or overvaluation of certain assets and liabilities. Inventory is undervalued $5,000. Land is undervalued $20,000. Buildings and equipment have a fair value which exceeds book value by $30,000. Bonds payable are overvalued $5,000. The remaining excess, if any, is due to goodwill. Prepare the necessary elimination entries in general journal form.
- On January 1, 20X1, Como Company purchased 45% of the outstanding common shares of the Lite Company for $200,000. The net assets of Lite Company totaled $400,000. The inventory had a book value of $100,000 and a fair value of $120,000. Excess cost attributable to inventory is written off in 20X1. During 20X1, Lite Company earned $200,000 and declared a dividend of $40,000 for the year. The excess amount paid for Lite Company attributable to inventory is: Multiple Choice $22,000. $20,000. $11,000. $9,000.On December 30, Draco, Inc. acquired a 100% ownership interest in Lamya Corporation at a cost of $300,000. Draco determined that Lamya’s inventory was undervalued by $20,000 on the acquisition date. Draco had retained earnings totaling $215,000, common stock totaling $60,000, total assets of $600,000, and total liabilities of $325,000 just before the consolidation. Lamya’s book value and fair market value of net assets were both $250,000 at the time of acquisition, with $50,000 reported as common stock and $200,000 reported as retained earnings.How much will Draco report as total stockholders' equity on its consolidated balance sheet immediately after the acquisition? Select one: A. $525,000 B. $285,000 C. $275,000 D. $575,000 PreviousSave AnswersNextCompany purchased 80% of the common stock of Subsidiary Company for $280,000. On this date, Subsidiary had total owners' equity of $250,000 (common stock $20,000; other paid-in capital, $80,000; and retained earnings, $150,000). Any excess of cost over book value is due to the under or overvaluation of certain assets and liabilities. Inventory is undervalued $5,000. Land is undervalued $20,000. Buildings and equipment have a fair value which exceeds book value by $30,000. Bonds payable are overvalued $5,000. The remaining excess, if any, is due to goodwill. Prepare the necessary elimination entries in general journal form.
- Company purchased 80% of the common stock of Subsidiary Company for $280,000. On this date, Subsidiary had total owners' equity of $250,000 (common stock $20,000; other paid-in capital, $80,000; and retained earnings, $150,000). Any excess of cost over book value is due to the under or overvaluation of certain assets and liabilities. Inventory is undervalued $5,000. Land is undervalued $20,000. Buildings and equipment have a fair value which exceeds book value by $30,000. Bonds payable are overvalued $5,000. The remaining excess, if any, is due to goodwill. Prepare a value analysis schedule for this business combination.On January 1, 20X1, Pinto Company purchased an 80% interest in Sands Inc. for $1,000,000. The equity balances of Sands at the time of the purchase were as follows: Common stock ($10 par) $100,000 Paid-in capital in excess of par 400,000 Retained earnings 500,000 Any excess of cost over book value is attributable to goodwill. No dividends were paid by either firm during 20X6. The following trial balances were prepared for Pinto Company and its subsidiary, Sands Inc., on December 31, 20X6: Pinto Sands Cash 120,000 70,000 Accounts receivable 240,000 197,000 Inventory 200,000 176,000 Land 600,000 180,000 Buildings and equipment 1,100,000 800,000 Accumulated depreciation (180,000) (120,000) Investment in Sands 1,000,000 Accounts payable (110,000) (50,000) Common stock, $10 par (800,000) (100,000) Paid-in capital in…On January 1, 20X1, Pinto Company purchased an 80% interest in Sands Inc. for $1,000,000. The equity balances of Sands at the time of the purchase were as follows: Common stock ($10 par) $100,000 Paid-in capital in excess of par 400,000 Retained earnings 500,000 Any excess of cost over book value is attributable to goodwill. No dividends were paid by either firm during 20X6. The following trial balances were prepared for Pinto Company and its subsidiary, Sands Inc., on December 31, 20X6: Pinto Sands Cash 120,000 70,000 Accounts receivable 240,000 197,000 Inventory 200,000 176,000 Land 600,000 180,000 Buildings and equipment 1,100,000 800,000 Accumulated depreciation (180,000) (120,000) Investment in Sands 1,000,000 Accounts payable (110,000) (50,000) Common stock, $10 par (800,000) (100,000) Paid-in capital in…
- On January 1, 20x1, Pine Corp acquired 75% interest in Sine Inc. for P2,400,000. On that date Sine Ordinary share and Retained earnings were P2,000,000 and P1,000,000. The non-controlling interest on the date of acquisition was P800,000. The assets and liabilities of Sine’s book values approximates their fair values except for the inventories and equipment which were undervalued by P30,000 and P50,000, respectively. The equipment has a remaining estimated life of five years. On October 1, 20x1, Sine Inc. sold equipment to Pine Corp. costing P300,000 with accumulated depreciation of P120,000 for P200,000. The remaining useful life of equipment was 4 years. In year 20x1, the goodwill is impaired by P5,000. On April 30, 20x2, Pine Corp. sold equipment to Sine Inc, costing P500,000 with accumulated depreciation P100,000 for P300,000. The remaining estimated life of equipment was five years. The following information were extracted from the separate financial statements of Pine and Sine for…On January 1, 20X1, Payne Corp. purchased 70% of Shayne Corp.'s $10 par common stock for $900,000. On this date, the carrying amount of Shayne's net assets was $1,000,000. The fair values of Shayne's identifiable assets and liabilities were the same as their carrying amounts except for plant assets (net), which were $200,000 in excess of the carrying amount. For the year ended December 31, 20X1, Shayne had net income of $150,000 and paid cash dividends totaling $90,000. Excess attributable to plant assets is amortized over 10 years. In the December 31, 20X1, consolidated balance sheet, noncontrolling interest should be reported at ____. a. $282,714 b. $300,500 c. $397,714 d. $345,500Parent Company acquired 80% of the outstanding shares of Subsidiary Company for 4,500,000 on January 2, 2020 and paid P50,000 for direct acquisition related costs. On this date, Subsidiary Company’s stockholders’ equity was composed of: Share Capital – P2,000,000; Share Premium – P1,200,000 and Retained Earnings – P1,600,000. The excess of cost over book value was allocated as follows: 10% to undervalued inventory, 40% to over depreciated fixed assets which has a remaining life of 5 years and the remainder to goodwill. Subsidiary reported net income of P200,000 and paid dividends of P150,000 in 2020. The impairment on goodwill for 2020 was reported to be P5,000. The NCI in the consolidated balance sheet on December 31, 2020 is?