Exam 1 Comprehensive Example

Exam 1 Comprehensive Example - Exam 1 Review: Comprehensive...

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1 Exam 1 Review: Comprehensive Example Information for on the date of business combination: Pencil acquired 90% of the voting stock of Sharpener, on January 2, 2007 at a cost of $27,830,000. Other data on the date of acquisition are shown below: Sharpener's book value at date of acquisition $2,000,000 Estimated fair value of noncontrolling interest 2,170,000 Plant and equipment with 10-year remaining life undervalued by 7,000,000 Long-term debt with a 4-year remaining term overvalued by 400,000 Previously unreported identifiable intangibles: Order backlog with a 2-year life 1,000,000 Favorable leaseholds with a 5-year life 3,000,000 Total calculated goodwill is $16,600,000. The total fair value of Sharpener's identifiable net assets is $13,400,000. Information for subsequent to the business combination: Intra-entity transactions between Pencil and Sharpener are as follows: In 2008, Sharpener sold land costing $5 million to Pencil for $5.5 million; Pencil sold the land in 2010 to an outside firm for $6.5 million
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Exam 1 Comprehensive Example - Exam 1 Review: Comprehensive...

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