act 470 ct 3

Anonymous
timer Asked: Dec 24th, 2018
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Question description

Option #1: Consolidation at Date Acquisition, Ownership <100%, FMV>BV.

Assume that a parent company acquires a 70% interest in a subsidiary for a purchase price of $1,078,000. The excess of total fair value of controlling and noncontrolling interests over book value is assigned to; a building (PPE net) that is worth $100,000 more than book value, an unrecorded patent valued at $200,000 and goodwill valued at $300,000. Goodwill is assigned proportionately to the controlling and noncontrolling interests.

Submission Requirements:

Using the ACT470_Mod03-Option01.xlsx Excel spreadsheet in the Module 3 folder:

  • Prepare the consolidated balance sheet at the date of acquisition by placing the appropriate entries in their respective debit/credit column cells.
  • Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is an [E] or [A] entry.
  • Use Excel formulas to derive the Consolidated column amounts and totals.
  • Using the “Home” key in Excel, go to the “Styles” area and highlight the [E] and [A] entry cells in different shades.
  • Review the grading rubric following this assignment, to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.

ACT470-Module 3-Option 1 Parent 920.000 782.000 1.100.000 1.078.000 Subsidiary 215.000 330.000 425.000 Property, plant and equipment (PPE), net Patent Goodwill Total assets 5.400.000 800.000 9.280.000 1.770.000 Current liabilities Long-term liabilities Common stock Additional paid-in capital Retained earnings Noncontrolling interest 810.000 4.000.000 920.000 700.000 2.850.000 330.000 500.000 90.000 120.000 730.000 Total liabilities and equity 9.280.000 1.770.000 Cash Accounts receivable Inventory Equity investment Consolidation Entries Dr 0 Consolidation Entries Cr Consolidated 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Tutor Answer

Perfectsolutions
School: Carnegie Mellon University

Attached.

Parent company requires 70% interest in subsidiary for a purchase price of $1,078,000
70% share paid as a consideration by parent company
Noncontrolling interst fair value (30%)
On the acquistion date total subsidiary fair value
Less : subsidiary value on acquistion date
Common stock
APIC
Retained earnings
Excess Fair value in book value
Allocation of excess fair value
Undervalued building
Unrecorded Patent
Goodwill
Balance

$10,48,000
$462,000
$15,40,000
90,000
1,20,000
7,30,000 $9,40,000
$6,00,000

...

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