P4-18 - P4-18 Incomplete Data with Purchase...

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Unformatted text preview: P4-18 Incomplete Data with Purchase Differentiala.The amount reported is equal to Kasper's retained earnings balance of $567,000.b.70 percent = 1.00 - [$96,000 / ($150,000 + $170,000)]c.$140,000 = $100,000 + [$328,000 - ($200,000 + $100,000)] / .70d.Computation of fair value of Timmin's net assets:Cash$ 60,000 Inventory (computed above)140,000 Land (given)80,000 Buildings and Equipment (given)220,000Fair value of total assets$500,000 Accounts Payable(40,000)Fair value of net assets held by Timmin$460,000e.Computation of purchase price:Proportionate share of book value of TimminCompany's net assets ($320,000 x .70)$224,000 Differential assigned to inventory28,000 Differential assigned to land17,000 Differential assigned to buildings and equipment38,000Amount Paid by Kasper$307,000NOTE: The fair value increment assigned to land and buildings and equipment is not equal to 70 percent of the excess of fair value over book value. The amounts assigned must be computed as follows:LandBuildings...
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P4-18 - P4-18 Incomplete Data with Purchase...

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