Week1_Chap4-Bancroft

Week1_Chap4-Bancroft - Student Name: Class: Problem 04-32...

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Student Name: Class: Problem 04-32 FATHER, INC. AND SAM CORPORATION - Purchase price allocation and annual amortization Acquisition-date subsidiary fair value $850,000 Book value of subsidiary (600,000) Fair value in excess of book value 250,000 Correct! Allocations to specific accounts based on difference between fair value and book value: Land $165,000 Buildings and equipment (25,000) Copyright 100,000 Notes payable 10,000 250,000 Total $- Correct! Life Excess Annual excess amortizations: (years) Amortizations Buildings and equipment $25,000 10 $(2,500) Copyright $100,000 20 5,000 Notes payable $10,000 8 1,250 Total $3,750 Correct!
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Student Name: Class: Problem 04-32 Totals for the business combination for the year ending December 31, 2006 FATHER, INC. AND SAM CORPORATION Account Name Balance Explanation Revenues $1,900,000 Add book values Cost of goods sold $1,085,000 Add book values Depreciation expense $267,500 Add book values - excess adjustment of $2,500 Amortization expense $10,000 Add book values + excess adjustment of $5,000 Interest expense $50,250 Add book values + excess adjustment of $1,250 Equity in income of Sam $- This is adjusted to zero Net income $487,250 Revenues - expenses Retained earnings, 1/1 $1,265,000 Parent company balance Noncontrolling interest in income $26,250 Subsidiary reported income (135,000) - amortization expense (3750) of subsidiary x outside ownership of 20% Dividends paid $260,000 Parent company balance Retained earnings, 12/31 $1,466,000 Consolidated balance (1/1/11) + consolidated NI - non controlling interest in subsidiary income -consolidated dividends Current assets $1,493,000 Add book values Investment in Sam $- Adjusted to zero Land $517,000 Add book values + excess allocation of $165,000 Buildings and equipment (net) $1,119,500 Add book values - allocation for overvalued asset of $25,000 + excess amortization Copyright $190,000 book value + excess allocation of $100,000 - amort for the year Total assets $3,319,500 Accounts payable $339,000 add book values Notes payable $581,250 add book values - excess allocation of $10,000 + amortization Noncontrolling interest in Sam $183,250 20% of fair value (1/1/11) (170,000) + subsidiary income non controlling interest (26,250) - dividends paid to outside owners (13,000) Common stock
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Week1_Chap4-Bancroft - Student Name: Class: Problem 04-32...

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