Question

In: Accounting

Consolidation Eliminations Several Years after Acquisition Paramount Corporation acquired its 75 percent investment in Sun Corporation...

Consolidation Eliminations Several Years after Acquisition Paramount Corporation acquired its 75 percent investment in Sun Corporation in January 2012, for $3,492,000 and accounts for its investment internally using the complete equity method. At the acquisition date, total book value of Sun was $1,800,000 including $960,000 of retained earnings, and the estimated fair value of the 25 percent noncontrolling interest was $948,000. The fair values of Sun's assets and liabilities were equal to their carrying values, except for the following items: Fair value less Book value Accounts receivable $(120,000) Inventory (150,000) Equipment (10 years, straight-line) (480,000) Patents (5 years, straight-line) 240,000 Deferred tax liabilities (created as a result of the nontaxable acquisition) 90,000 The receivables were collected and the inventory sold during the first three years following the acquisition. Deferred tax liabilities of $72,000 were reversed during 2012–2017. An impairment test made at the end of 2017 indicates a remaining value of $2,400,000 for the goodwill recognized as a result of the acquisition. Sun's shareholders' equity is $3,000,000 including $2,160,000 of retained earnings, at the end of 2017. For all answers below: Enter answers using all zeros, do not abbreviate to thousands or millions. Required (a) Calculate the amount of goodwill initially recognized as a result of the acquisition, and its allocation to the controlling and noncontrolling interests. Allocation of goodwill Goodwill Answer Paramount’s share of goodwill: Answer Noncontrolling interest’s share of goodwill Answer (b) Calculate the balance in the investment account, carried on Paramount's books, and the value of the noncontrolling interest, reported in the equity section of the consolidated balance sheet, as of the end of 2017. Balances as of 2017 year-end Investment in Sun Answer Noncontrolling interest in Sun Answer (c) Assume eliminating entry (C), to reverse Paramount's equity method entries for 2018, has been made. Prepare 2018 eliminating entries (E) and (R) to adjust Sun's assets to the correct values as of the beginning of 2018, eliminate the remainder of the investment, and recognize the beginning-of-2018 value of the noncontrolling interest. Consolidation Journal Description Debit Credit (E) Answer Answer Answer Answer Answer Answer Noncontrolling interest in Sun Answer Answer (R) Answer Answer Answer Equipment, net Answer Answer Deferred tax liabilities Answer Answer Answer Answer Answer Noncontrolling interest in Sun Answer Answer

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Consolidation Eliminations Several Years after Acquisition Paramount Corporation acquired its 75 percent investment in Sun Corporation...
Consolidation Eliminations Several Years after Acquisition Paramount Corporation acquired its 75 percent investment in Sun Corporation in January 2012, for $5,820,000 and accounts for its investment internally using the complete equity method. At the acquisition date, total book value of Sun was $3,000,000 including $1,600,000 of retained earnings, and the estimated fair value of the 25 percent noncontrolling interest was $1,580,000. The fair values of Sun's assets and liabilities were equal to their carrying values, except for the following items:...
Paramount Corporation acquired its 75 percent investment in Sun Corporation in January 2012, for $3,492,000 and...
Paramount Corporation acquired its 75 percent investment in Sun Corporation in January 2012, for $3,492,000 and accounts for its investment internally using the complete equity method. At the acquisition date, total book value of Sun was $1,800,000 including $960,000 of retained earnings, and the estimated fair value of the 25 percent noncontrolling interest was $948,000. The fair values of Sun's assets and liabilities were equal to their carrying values, except for the following items: Fair value less Book value Accounts...
Consolidation several years subsequent to date of acquisition—Equity method Assume that a parent company acquired a...
Consolidation several years subsequent to date of acquisition—Equity method Assume that a parent company acquired a subsidiary on January 1, 2014. The purchase price was $785,000 in excess of the subsidiary’s book value of Stockholders’ Equity on the acquisition date, and that excess was assigned to the following [A] assets: [A] Asset Original Amount Original Useful Life Property, plant and equipment (PPE), net $140,000 16 years Patent 245,000 7 years License 105,000 10 years Goodwill 295,000 Indefinite $785,000 The [A]...
Consolidation several years subsequent to date of acquisition—Equity method Assume that a parent company acquired a...
Consolidation several years subsequent to date of acquisition—Equity method Assume that a parent company acquired a subsidiary on January 1, 2014. The purchase price was $765,000 in excess of the subsidiary’s book value of Stockholders’ Equity on the acquisition date, and that excess was assigned to the following [A] assets: [A] Asset Original Amount Original Useful Life Property, plant and equipment (PPE), net $140,000 16 years Patent 245,000 7 years License 105,000 10 years Goodwill 275,000 Indefinite $765,000 The [A]...
Consolidation several years subsequent to date of acquisition—Equity method Assume a parent company acquired a subsidiary...
Consolidation several years subsequent to date of acquisition—Equity method Assume a parent company acquired a subsidiary on January 1, 2017. The purchase price was $820,000 in excess of the subsidiary’s book value of Stockholders’ Equity on the acquisition date, and that excess was assigned to the following [A] assets: [A] Asset Original Amount Original Useful Life Property, plant and equipment (PPE), net $240,000 12 years Patent 240,000 8 years License 160,000 10 years Goodwill 180,000 Indefinite $820,000 The [A] assets...
Consolidation Eliminating Entries, Date of Acquisition and Two Years Later Plaza Hotels acquired a 90 percent...
Consolidation Eliminating Entries, Date of Acquisition and Two Years Later Plaza Hotels acquired a 90 percent interest in Stardust Casinos on January 1, 2020 for $51,100,000. The fair value of the 10 percent noncontrolling interest at the date of acquisition was $2,900,000. Stardust’s date-ofacquisition reported net assets were carried at amounts approximating fair value, except for these items: • Plant and equipment, 10-year life, straight-line, is overvalued by $6,000,000. • Previously unrecorded limited-life identifiable intangibles, 4-year life, straight-line, were valued...
Date of Acquisition Consolidation Eliminating Entries Pennant Corporation acquired 80 percent of Saylor Company’s common stock...
Date of Acquisition Consolidation Eliminating Entries Pennant Corporation acquired 80 percent of Saylor Company’s common stock for $20,000,000 in cash. At the date of acquisition, Saylor’s $5,000,000 of reported net assets were fairly stated, except land was overvalued by $200,000 and unrecorded developed technology was valued at $2,000,000. The estimated fair value of the noncontrolling interest is $4,000,000 at the acquisition date. Required (a) Calculate total goodwill and its allocation to the controlling and noncontrolling interests. Enter answers using all...
Date of Acquisition Consolidation Eliminating Entries Pennant Corporation acquired 80 percent of Saylor Company's common stock...
Date of Acquisition Consolidation Eliminating Entries Pennant Corporation acquired 80 percent of Saylor Company's common stock for $12,000,000 in cash on January 2, 2013. At that date, Saylor's $7,200,000 of reported net assets were fairly stated, except land was undervalued by $600,000 and unrecorded in-process R&D was valued at $1,200,000. The estimated fair value of the noncontrolling interest is $2,400,000 at the acquisition date. (a) Calculate total goodwill and its allocation to the controlling and noncontrolling interests. Allocation of goodwill...
Date of Acquisition Consolidation Eliminating Entries Pennant Corporation acquired 80 percent of Saylor Company's common stock...
Date of Acquisition Consolidation Eliminating Entries Pennant Corporation acquired 80 percent of Saylor Company's common stock for $6,000,000 in cash on January 2, 2013. At that date, Saylor's $3,600,000 of reported net assets were fairly stated, except land was undervalued by $300,000 and unrecorded developed technology was valued at $600,000. The estimated fair value of the noncontrolling interest is $1,200,000 at the acquisition date. (a) Calculate total goodwill and its allocation to the controlling and noncontrolling interests. Enter answers using...
Comprehensive Problem: Consolidation Working Paper and Financial Statements Pierre Corporation acquired 75 percent of Selene Corporation’s...
Comprehensive Problem: Consolidation Working Paper and Financial Statements Pierre Corporation acquired 75 percent of Selene Corporation’s common stock for $20,100,000 on January 2, 2017. The estimated fair value of the noncontrolling interest was $5,900,000. Selene’s book value at date of acquisition was $10,000,000, and its identifiable net assets were fairly stated except for previously unreported completed technology, valued at $4,000,000, with a remaining life of 5 years, straight‑line. It is now December 31, 2020, and you are preparing consolidated financial...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT