21. On December 31, 2016, Parent Company purchased 80% of the common stock of Su

Question

21. On December 31, 2016, 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 a. Prepare a value analysis schedule for this business combination. b. Prepare the determination and distribution schedule for this business combination

Explanation / Answer

Part a)

The value analysis schedule for the business combination is provided as below:

_____

Part b)

The determination and distribution schedule for the business combination is provided as follows:

_____

Part c)

The necessary elimination entries are given as below:

Value Analysis Schedule Company Implied Fair Value Parent Price NCI Value Company Fair Value 350,000 280,000 70,000 Fair Value Identifiable Net Assets 310,000 248,000 62,000 Goodwill 40,000 32,000 8,000

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.