Ch 3: Subsequent to the Date of Acquisition (100% ownership) ACCT 501, SP 12 1)Example 1: Accounting for Parent to record Investment - Equity Method Suppose Panda obtained 100% of Snail’s outstanding common stock on January 1, 2010, by issuing 1,000,000 shares of $15 par value common stock. Panda’s shares had a $75 per share fair value. Snail’s book value is $10 million. Book and fair values are the same except for equipment with fair value $15 million higher than book value. Snail has unreported identifiable intangibles valued at $2 million. Assume that Panda uses the equity method to account for its investment. Information for on the date of acquisition: Required: A). Is it goodwill or gain on bargain purchase recognized from this acquisition? What is the amount? Snail’s fair value (Consideration transferred by Panda) $75,000,000 Book value of Snail 10,000,000Excess of fair value over Snail's book value 65,000,000 Allocation of Differences between fair value and book value: Equipment $15,000,000 Identifiable intangibles 2,000,00017,000,000 Goodwill $48,000,000Required: B). how should Panda record its acquisition of Snail’s common stock? Dr: Investment in Snail $75,000,000 Cr: Common Stock 15,000,000 Cr: APIC 60,000,000
has intentionally blurred sections.
Sign up to view the full version.