Ch5hBW - One the next page are the balance sheets...

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Unformatted text preview: One the next page are the balance sheets immediately prior to the purchase by Pandemic of 60% of the outstanding stock of Sniffles. Pandemic paid $1,900 cash, and the fair value of the 40% not owned by Pandemic at the date of acquisition (1 Jan 20x1) was $1,000. The table to the right shows the fair value of Sniffles's recorded assets at the date of acquistion. Sniffles use FIFO for inventory purposes. Also, there existed two unrecorded assets as listed to the right. Recorded Assets: Fair Value Life 1. Perform the consolidation at the date of acquisition (form provided). Cash & Receivables 840 $ < 1 year 2. On 31 Dec 20x1, Sniffles recorded a $1,400 net income. Analysis showed no goodwill impairment. Perform the consolidation on that date (form provided). Inventories 430 < 1 year 3. On 31 Dec 20x2, Sniffles recorded a $500 net income. Analysis showed goodwill was impaired by $400. Perform the consolidation on that date (form provided). Plant Assets, net 600 10 years 4. Describe (in essay form) how any of the above would be different if Sniffles used LIFO for inventory. (answer provided in class) Land 880 indefinite Current Liabilities (320) < 1 year Long-term Liabilities (860) 8 years Unrecorded Intangibles: Lease Agreement 270 3 years HW5 In-process Contracts 100 2 years C h a p t e r 5 H o m e w o r k-- 1 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved Prior to Acquisition Pandemic Sniffles 1 Jan 20x1 Cash & Receivables 5,130 840 Inventory 750 400 Property, P, E, net 1,800 700 Land 2,500 800 Current Liabilities 480 320 Long-term Liabilities 1,200 900 Common Stock 1,000 10 Ret. Earnings 7,500 1,510 HW5 10,180 10,180 2,740 2,740 C h a p t e r 5 H o m e w o r k-- 2 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved Acquisition: HW5 Subsequent: Cash Susequent Year Amortizations (not incl. GW, if any) Fair value of NCI Total Fair Value Writeup/downs & Additions: Amount Life Year 1 Year 2 Book value of Sub Inventories < 1 Fair value in excess of book Plant Assets, net 10 Writeup/downs & Additions: Fair Value Book Value Incr (Decr) in net assets Land indef. Cash & Receivables 840 $ 840 $ Noncurrent Liabilities 8 Inventories 430 400 Lease Agreement 3 Plant Assets, net 600 700 Non-GW amortizations Land 880 800 Current Liabilities (320) (320) End Year One: Long-term Liabilities (860) (900) Total CI NCI Lease Agreement 270 Reported Net Inc. 1,400 $ Total goodwill Adjustments: Non-GW- Goodwill to CI: Goodwill Acquisition price- $ Share of NI Less CI share- CI goodwill- $ Adjustments Split: Non-GW 100% 60% 40% Goodwill to NCI: Goodwill 100% Total goodwill- $ Less: CI goodwill- End Year Two: NCI goodwill- $ Total CI NCI Reported Net Inc. 500 $ Acquisition: Adjustments: NCI at acquisition: Non-GW Book value of Sub- $ Goodwill Writeup/downs & Additions:- Share of NI- X 40%- NCI goodwill- NCI in Net Assets- $ C h a p t e r 5 H o m e w o r k-- 3 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved Post-Acquisition/HW5 Pandemic Sniffles...
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Ch5hBW - One the next page are the balance sheets...

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