act 470 ct 3

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.

Unformatted Attachment Preview

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 ...
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Tutor Answer

School: Carnegie Mellon University


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
Retained earnings
Excess Fair value in book value
Allocation of excess fair value
Undervalued building
Unrecorded Patent

7,30,000 $9,40,000


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