Date of Acquisition Consolidation Eliminating Entries Pennant Corporation acquir

Question

Date of Acquisition Consolidation Eliminating Entries

Pennant Corporation acquired 80 percent of Saylor Company’s common stock for $12,000,000 in cash. At the date of acquisition, Saylor’s $3,000,000 of reported net assets were fairly stated, except land was undervalued by $200,000 and unrecorded in-process R&D was valued at $1,500,000. The estimated fair value of the noncontrolling interest is $2,600,000 at the acquisition date.

Required
(a) Calculate total goodwill and its allocation to the controlling and noncontrolling interests.

(b) Prepare the working paper eliminating entries needed to consolidate Pennant and Saylor at the date
of acquisition.

Incorrect
0.00 points out of 1.00

Allocation of goodwill between controlling and noncontrolling interest: Total goodwill $Answer Pennant's goodwill Answer Goodwill to noncontrolling interest $Answer

Explanation / Answer

Capitalized value of Average Profit = 12000000 + 2600000 14600000 Capital Employed = 3000000 - 200000 + 1500000 4300000 Total Goodwill = 14600000 - 4300000 10300000 Pannant's Goodwill = 8240000 Goodwill of uncontrolling interest = 2060000 Consolidation Journal Description Debit Credit Investment in Saylor stockholder's equity 15000000 Cash stockholders equity 12000000 Non controlling interest in saylor 3000000

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