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Chapter_3_problem_17

Chapter_3_problem_17 - 17(30 Minutes(Consolidation entries...

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17. (30 Minutes) (Consolidation entries for two years. Parent uses equity method.) Fair Value Allocation and Annual Amortization: Acquisition fair value (consideration paid) ............. $490,000 Book value (assets minus liabilities or total stockholders' equity) .................................................................... (400,000 ) Excess fair value over book value ............................ $90,000 Excess fair value assigned to specific accounts based on individual fair values Annual Excess Life Amortizations Land ........................................... $10,000 -- -- Buildings ................................. 40,000 4 yrs. $10,000 Equipment ................................. (20,000 ) 5 yrs. (4,000) Total assigned to specific accounts ....................... 30,000 Goodwill .................................... 60,000 Indefinite -0- Total ....................................... $90,000 $6,000 Consolidation Entries as of December 31, 2009 Entry S Common Stock—Abernethy .................................. 250,000 Additional Paidin Capital .................................... 50,000 Retained Earnings—1/1/09 ................................... 100,000 Investment in Abernethy ................................ 400,000 (To eliminate stockholders' equity accounts of subsidiary) Entry A Land ........................................................................ 10,000 Buildings ................................................................. 40,000 Goodwill ................................................................. 60,000 Equipment ........................................................ 20,000 Investment in Abernethy ................................ 90,000 (To recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill).
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17. (continued) Entry I Equity in Subsidiary Earnings ............................. 74,000
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