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    CH 4 Comprehensive Problem

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    L
    The document summarizes the acquisition of an 80% stake in a company by a parent company. It shows the allocation of the purchase price to identifiable assets and goodwill. Specifically, it allocates $425,000 of the $527,500 total value to land, buildings, equipment, and a royalty agreement. The remaining $15,000 is allocated to goodwill. It also provides the amortization schedules for the assets and shows their elimination in the consolidated financial statements for the parent and acquiree.

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    CH 4 Comprehensive Problem

    Uploaded by

    L
    81 views5 pages
    The document summarizes the acquisition of an 80% stake in a company by a parent company. It shows the allocation of the purchase price to identifiable assets and goodwill. Specifically, it allocates $425,000 of the $527,500 total value to land, buildings, equipment, and a royalty agreement. The remaining $15,000 is allocated to goodwill. It also provides the amortization schedules for the assets and shows their elimination in the consolidated financial statements for the parent and acquiree.

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    Ch 4 Comprehensive Problem

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    The document summarizes the acquisition of an 80% stake in a company by a parent company. It shows the allocation of the purchase price to identifiable assets and goodwill. Specifically, it allocates $425,000 of the $527,500 total value to land, buildings, equipment, and a royalty agreement. The remaining $15,000 is allocated to goodwill. It also provides the amortization schedules for the assets and shows their elimination in the consolidated financial statements for the parent and acquiree.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    81 views5 pages

    CH 4 Comprehensive Problem

    Uploaded by

    L
    The document summarizes the acquisition of an 80% stake in a company by a parent company. It shows the allocation of the purchase price to identifiable assets and goodwill. Specifically, it allocates $425,000 of the $527,500 total value to land, buildings, equipment, and a royalty agreement. The remaining $15,000 is allocated to goodwill. It also provides the amortization schedules for the assets and shows their elimination in the consolidated financial statements for the parent and acquiree.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 5

    Acquision Price Paid (for 80%) 425,000 80.

    57% 80% 20%


    FMV of NCI (20%) 102,500 19.43% Parent NCI TOTAL
    Total Value to be Assinged 527,500 425,000 102,500 527,500
    NVB of Acquiree 400,000 320,000 80,000 400,000
    Excess of Acq. Value over NBV 127,500 105,000 22,500 127,500

    Identified "under-valued" assets 112,500

    FMV Assignments
    Land 50,000 40,000 10,000
    Buildings 20,000 16,000 4,000
    Equipment 12,500 10,000 2,500
    Royalty Agmt 30,000 24,000 6,000
    Identified "under-valued" assets 112,500 90,000 22,500
    To be Assigned to Goodwill 15,000 15,000 -

    "Excess" Expense / Amortization years per year


    Land 50,000 no amort
    buildings 20,000 8 2,500 4 10,000
    Equipment 12,500 5 2,500 4 10,000
    Royalty Agmt 30,000 20 1,500 4 6,000
    26,000
    12/31/2013 20/31/2013 Eliminations & Adj.
    Income Statement: Father Son Debit Credit
    Revenues 780,000 360,000
    Expenses 550,000 190,000
    Amortization Expense E-1 1,500
    Depreciation Expense E-1 5,000
    Divident Income 16,000 D 16,000
    CONSOLIDATED NET INCOME 246,000### 170,000 22,500 -
    NET INCOME to Noncontrolling Interest
    Net INCOME to Controling Interest
    Statement of Retained Earnings
    Retained Earnings - B. O. Y. 704,000 480,000 S-2 240,000
    S-3 60,000
    E-2 26,000
    Dividends Paid 90,000 20,000 16,000 D
    Ratained Earnings - E. O. Y. 860,000 630,000

    Balance Sheet
    Current Assets 605,000 280,000 20,000 P
    Intercompany Receivable
    Investment in Sun Co. 425,000 80,000 S-1
    240,000 S-2
    90,000 A-1
    15,000 A-2

    Buildings (net) 640,000 290,000 A-1 20,000 10,000 E-2


    2,500 E-1
    Equipment (net) 380,000 160,000 A-1 12,500 10,000 E-2
    2,500 E-1
    Land 200,000 300,000 A-1 50,000
    Royalty Agreement A-1 30,000 6,000
    1,500
    Goodwill A-2 15,000
    Total Assets 1,220,000 750,000

    Liabilities 910,000 300,000 P 20,000


    Intercompany Payable
    Common Stock' 480,000 100,000 S-1 80,000
    S-4 20,000
    Additional P.I.C.
    Noncontrollin Interest in Sun 12/31/13 20,000 S-4
    Ret. Earnings E. O. Y. 60,000 S-3
    22,500 A-1
    Total Liabilities and Equity
    Non-Contr. Intr.Consolidated Totals
    1,140,000
    740,000
    1,500
    5,000 N. Inc. to NCI
    - 170,000 Sun's Net Income
    393,500 (6,500) Necessary expense adj.
    32,700 (32,700) 163,500
    360,800 20%
    - 32,700
    858,000
    -
    -
    4,000 90,000
    1,128,800
    -
    -
    885,000
    -
    -
    -
    A-1 -
    A-2 -
    -
    937,500
    -
    540,000
    -
    550,000
    22,500
    -
    15,000

    -
    1,210,000
    -
    580,000
    -
    -
    -
    -
    102,500 -
    28,700 -
    -

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