Ch3HW-B - 28. (35 minutes) (Acquisition method: Contingent...

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Unformatted text preview: 28. (35 minutes) (Acquisition method: Contingent performance obligation and worksheet adjustments for equity and initial value methods.) a. Investment in Wolfpack, Inc. 500,000 Contingent performance obligation 35,000 Cash 465,000 b. 12/31/09 Loss from increase in contingent performance obligation 5,000 Contingent performance obligation 5,000 12/31/10 Loss from increase in contingent performance obligation 10,000 Contingent performance obligation 10,000 12/31/10 Contingent performance obligation 50,000 Cash 50,000 c. Equity Method Common stock- Wolfpack 200,000 Retained earnings-Wolfpack 180,000 Investment in Wolfpack 380,000 Royalty agreements 90,000 Goodwill 60,000 Investment in Wolfpack 150,000 Equity earnings of Wolfpack 65,000 Investment in Wolfpack 65,000 Investment in Wolfpack 35,000 Dividends paid 35,000 Amortization expense 10,000 Royalty agreements 10,000 d. Initial Value Method Investment in Wolfpack 30,000 Retained earnings-Branson 30,000 Common stock 200,000 Retained earnings-Wolfpack 180,000 Investment in Wolfpack 380,000 Royalty agreements 90,000 Goodwill 60,000 Investment in Wolfpack 150,000 Dividend income 35,000 Dividends paid 35,000 Amortization expense 10,000 Royalty agreements 10,000 30. (20 Minutes) (Consolidated balances three years after purchase. Parent has applied the equity method.) a. Schedule 1Acquisition-Date Fair Value Allocation and Amortization Jasmines acquisition-date fair value $206,000 Book value of Jasmine ................... (140,000 ) Fair value in excess of book value 66,000 Excess fair value assigned to specific accounts based on individual fair values Annual Excess Life Amortization Equipment .................................. 54,400 8 yrs. $6,800 Buildings (overvalued) .............. (10,000 ) 20 yrs. (500) Goodwill ...................................... $21,600 indefinite...
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Ch3HW-B - 28. (35 minutes) (Acquisition method: Contingent...

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