Question
In: Accounting
On 1/1/20, Coke Co. paid $2,800,000 to acquire all of the common stock of Dodo Corp....
On 1/1/20, Coke Co. paid $2,800,000 to acquire all of the common stock of Dodo Corp. On that date, Dodo's equity included $1,000,000 capital stock and $1,600,000 of retained earnings. An appraisal of Dodo's assets identified a patent that had a market value of $140,000 and a life of 5 years that was unrecorded. Dodo's reported earnings for 2020 totaled $512,000 and it paid $160,000 of dividends during the year. The amortization of allocations related to the investment was $28,000. Coke's net income, not including the investment, was $3,310,000, and it paid dividends of $950,000.
A.) How much goodwill exists on 1/1/20?
B.) What is the amount of consolidated net income for 2020?
C.) Assuming that you are consolidating trial balances on 12/31/20, what consolidation worksheet entries should Coke make to establish reciprocity between Coke's investment and Dodo's shareholders' equity?
D.) Assuming that you are consolidating trial balances on 12/31/20, what consolidation worksheet entries should Coke make to eliminate the investment account? You do not need to allocate the differential.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On 1/1/20, Coke Co. paid $2,800,000 to acquire all of the common stock of Dodo Corp....
On 1/1/20, Coke Co. paid $2,800,000 to acquire all of the common
stock of Dodo Corp. On that date, Dodo's equity included $1,000,000
capital stock and $1,600,000 of retained earnings. An appraisal of
Dodo's assets identified a patent that had a market value of
$140,000 and a life of 5 years that was unrecorded. Dodo's reported
earnings for 2020 totaled $512,000 and it paid $160,000 of
dividends during the year. The amortization of allocations related
to the investment was $28,000....
Problem 12-04 On July 31, 2020, Sunland Company paid $2,800,000 to acquire all of the common...
Problem 12-04
On July 31, 2020, Sunland Company paid $2,800,000 to acquire all
of the common stock of Conchita Incorporated, which became a
division (a reporting unit) of Sunland. Conchita reported the
following balance sheet at the time of the acquisition.
Current assets
$720,000
Current liabilities
$510,000
Noncurrent assets
2,500,000
Long-term liabilities
410,000
Total assets
$3,220,000
Stockholders’ equity
2,300,000
Total liabilities and stockholders’ equity
$3,220,000
It was determined at the date of the purchase that the fair value
of the...
On January 1, 2016, A Corp. issued shares of its common stock to acquire all of...
On January 1, 2016, A Corp. issued shares of
its common stock to acquire all of the outstanding common stock of
B Inc. B’s book value was only $140,000 at the time, but A issued
12,000 shares having a par value of $1 per share and a fair value
of $20 per share. A was willing to convey these shares because it
felt that buildings (ten-year life) were undervalued on B's records
by $60,000 while equipment (five-year life) was undervalued...
On January 1, 2014, Kane Corp. issued shares of its common stock to acquire all of...
On January 1, 2014, Kane Corp. issued shares of its common stock
to acquire all of the outstanding common stock of Dean Inc. Dean's
book value was only $140,000 at the time, but Kane issued 12,000
shares having a par value of $1 per share and a fair value of $20
per share. The buildings (ten-year life) were undervalued on Dean's
records by $60,000 while equipment (five-year life) was undervalued
by $25,000. Any consideration transferred over fair value of
identified...
On May 31, 2021, Sunland Company paid $3,780,000 to acquire all of the common stock of...
On May 31, 2021, Sunland Company paid $3,780,000 to acquire all
of the common stock of Carla Vista Corporation, which became a
division of Sunland. Carla Vista reported the following balance
sheet at the time of the acquisition:
Current assets
$ 972,000
Current liabilities
$ 648,000
Noncurrent assets
2,916,000
Long-term liabilities
540,000
Stockholder's equity
2,700,000
Total assets
$3,888,000
Total liabilities and
stockholder's equity
$3,888,000
It was determined at the date of the purchase that the fair value
of the identifiable net assets...
On May 31, 2021, Sunland Company paid $3,780,000 to acquire all of the common stock of...
On May 31, 2021, Sunland Company paid $3,780,000 to acquire all
of the common stock of Carla Vista Corporation, which became a
division of Sunland. Carla Vista reported the following balance
sheet at the time of the acquisition:
Current assets
$ 972,000
Current liabilities
$ 648,000
Noncurrent assets
2,916,000
Long-term liabilities
540,000
Stockholder's equity
2,700,000
Total assets
$3,888,000
Total liabilities and
stockholder's equity
$3,888,000
It was determined at the date of the purchase that the fair value
of the identifiable net assets...
On July 31, 2020, Ivanhoe Company paid $2,750,000 to acquire all of the common stock of...
On July 31, 2020, Ivanhoe Company paid $2,750,000 to acquire all
of the common stock of Conchita Incorporated, which became a
division (a reporting unit) of Ivanhoe. Conchita reported the
following balance sheet at the time of the acquisition.
Current assets
$830,000
Current liabilities
$550,000
Noncurrent assets
2,450,000
Long-term liabilities
450,000
Total assets
$3,280,000
Stockholders’ equity
2,280,000
Total liabilities and stockholders’ equity
$3,280,000
It was determined at the date of the purchase that the fair value
of the identifiable net...
On July 31, 2020, Oriole Company paid $2,750,000 to acquire all of the common stock of...
On July 31, 2020, Oriole Company paid $2,750,000 to acquire all
of the common stock of Conchita Incorporated, which became a
division (a reporting unit) of Oriole. Conchita reported the
following balance sheet at the time of the acquisition.
Current assets
$730,000
Current liabilities
$560,000
Noncurrent assets
2,450,000
Long-term liabilities
460,000
Total assets
$3,180,000
Stockholders’ equity
2,160,000
Total liabilities
and stockholders’ equity
$3,180,000
It was determined at the date of the purchase that the fair value
of the identifiable net...
On July 31, 2020, Crane Company paid $2,950,000 to acquire all of the common stock of...
On July 31, 2020, Crane Company paid $2,950,000 to acquire all
of the common stock of Conchita Incorporated, which became a
division (a reporting unit) of Crane. Conchita reported the
following balance sheet at the time of the acquisition.
Current assets
$720,000
Current liabilities
$520,000
Noncurrent assets
2,650,000
Long-term liabilities
420,000
Total assets
$3,370,000
Stockholders’ equity
2,430,000
Total liabilities and stockholders’ equity
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It was determined at the date of the purchase that the fair value
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On January 1, 2020, ABC Co. paid $800,000 to acquire common shares of XYZ Co., which...
On January 1, 2020, ABC Co. paid $800,000 to acquire common
shares of XYZ Co., which
represented 30% of XYZ Co.’s shares outstanding. The value of
XYZ’s net assets was
$1,850,000 on that date. The excess of the purchase price over
ABC’s share of XYZ’s net assets
is attributed to unrecorded intangibles with a 20-year life. XYZ
earned net income and
comprehensive income of $400,000 in 2020 and paid dividends of
$80,000. The investment in
XYZ had a fair value...
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