King Pawn Exercise2 - Assume that King Co acquires 80 of...

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Assume that King Co acquires 80% of Pawn Co's 100,000 outstanding voting shares on January 1, 2012, for a total of $800,000 cash. The shares are publicly traded at an average of $9.75 per share, before and after the acquisition. Book value of Pawn's accounts, fair value of each asset and liability, and differences on the acquisition date: Pawn Co Balances January 1, 2012 Book Value Fair Value Current Assets $440,000 $440,000 Trademarks (indef. lives) $260,000 $320,000 Patented Tech (20 year life)$480,000 $600,000 Equipment (10 year life) $110,000 $100,000 LT Liabilities (8 yrs to maturity) $(550,000) $(510,000) Net assets $740,000 $950,000 Common Stock $230,000 Retained Earnings 1/1/12 $510,000 2012 income of Pawn is $70,000 and no dividends were paid in 2012. Equity method is used by King post-acquisition. Required: Calculate the consolidation entries and prepare the consolidation worksheet for the end of 2013 .
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12/31/2013 King Pawn Current Assets 706,000 445,000 Trademarks 304,000 295,000 Patented Technology 880,000 540,000 Equipment (net) 390,000 160,000 Investment in Pawn Co 872,000 - Goodwill - - Total Assets 3,152,000 1,440,000 Liabilities (1,082,000) (590,000) Common Stock (870,000) (230,000) Non-controlling Interest Retained Earnings (1,200,000) (620,000) Total Liabilities and Equity (3,152,000) (1,440,000)
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