Statue Corporation’s balance sheet at January 1, 20X7, reflected the following balances: Assets Liabilities & Stockholders’...

Statue Corporation’s balance sheet at January 1, 20X7, reflected the following balances:


Assets			Liabilities & Stockholders’ Equity
Cash & Receivables	$	80,000	Accounts Payable	$	40,000
Inventory		120,000	Income Taxes Payable		60,000
Land		70,000	Bonds Payable		200,000
Buildings & Equipment (net)		480,000	Common Stock		250,000
			Retained Earnings		200,000
Total Assets	$	750,000	Total Liabilities & Stockholders’ Equity	$	750,000

Prize Corporation entered into an active acquisition program and acquired 80 percent of Statue's common stock on January 2, 20X7, for $470,000. The fair value of the noncontrolling interest at that date was determined to be $117,500. A careful review of the fair value of Statue's assets and liabilities indicated the following:

	Book Value			Fair Value
Inventory		$	120,000		$	140,000
Land			70,000			60,000
Buildings & Equipment (net)			480,000			550,000

Goodwill is assigned proportionately to Prize and the noncontrolling shareholders.

Required:
Compute the appropriate amount related to Statue to be included in the consolidated balance sheet immediately following the acquisition for each of the following items:

Items	Amounts
Inventory	140,000
Land	60,000
Building and Equipment	550,000
Goodwill
Investment in Statue	0
No controlling Interest

Solutions

Expert Solution

Inventory = $140,000

Land = $60,000

Building = $550,000

Goodwill = $57,500

Investment in Statue = 0

Non-controlling interest = $117,500

Working note:

Calculation of Goodwill:

Results of the excel sheet are as follows:

Calculation of Non-controlling interest:

Non-controlling interest = Total fair value x Non-controlling interest percent

= $587,500 x 20%

= $117500

ekkarill92 answered 1 year ago

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