The parent company, Briar Rose paid 2,990,000 for 100% interest in Mulan Co on Jan 1...

The parent company, Briar Rose paid 2,990,000 for 100% interest in Mulan Co on Jan 1 2016, following financial data was collected at date of aquisition.

	Briar	Mulan
cash	3151000	73600
Accounts Receivable	823400	154100
Inventory	1288000	391000
Prepaids	103500	34500
Land	1426000	460000
Building	4991000	1552500
accum depreciation-building	(3137200)	(172500)
Equipment	8280000	4140000
accum depreciation-equipment	(4968000)	(828000)
copy right + trademark-net	2047000	-
total assets	14004700	5805200

Accounts Payable	(1437500)	(322000)
Unearned Rev	(310500)	-
Long Term Debt	(6394000)	(3450000)
Common stock	1288000	207000
Additional Paid in Capital	(2530000)	(713000)
Retained Earnings	(2044700)	(1113200)
total liabilities and equity	(14004700)	(5805200)

As part of aquisition process Briar Rose contracted KPMG to do third party analysis of Mulan as date of aquisition, results below:

	fair value
Accounts Receivable	154100
Inventory	391000
Prepaids	34500
Land	575000
building, net	1442100
equip, net	3450000
Accounts Payable	322000
Long Term Debt	(3415500)
Customer list	310,550
Copy Right	188600

depreciation/amortization methods and useful lives

building- straight line depreciation, 27 years

equip- straight line depreciation, 15 years

other intangible- straight line amortization, 10 years

Patent and Copy right- straight line amortization, 8 years

Long-Term Debt- straight line amortization, 3 years

Required:

1) Prepare allocation schedule including depreciation/amortization for Briar's investment in Mulan as of Jan 1, 2016.

2) Prepare consolidatoin entries (S,A,I,D,E) for Briar for year end Dec 31, 2016

3) Prepare consolidation entried (S,A,I,D,E) for Briar for year end Dec 31, 2017

4) Disregard 2 and 3. Assume Briar used the inital value method instead of equity method. Prepare consolidation entries (S,A,I,E,*C) for Briar year end Dec 31 2016 using intital value method.

Expert Solution

	Consolidation entry using Fair Values
	Net Identifiable Assets	66,19,450.00
	Goodwill (Balancing Figure)	1,08,050.00
		To Consideration Payable	29,90,000.00
		To Identifiable Liabilities	37,37,500.00

Asset Name	Book Value	Accumulated Depriciation	Net Value	Fair Value
Building	15,52,500.00	1,72,500.00	13,80,000.00	14,42,100.00
Equipment	41,40,000.00	8,28,000.00	33,12,000.00	34,50,000.00

	Consolidation entry using Book Values
	Net Identifiable Assets	58,05,200.00
	Goodwill (Balancing Figure)	9,56,800.00
		To Consideration Payable	29,90,000.00
		To Identifiable Liabilities	37,72,000.00

	Entry for the Year ended December 2016
	Depriciation on Building	16,26,951.85
	Depriciation on Equipments	40,02,000.00
	Amortisation on Customer List	31,055.00
	Amortisation on Copy Right	4,44,475.00
		Building	16,26,951.85
		Equipment	40,02,000.00
		Customer List	31,055.00
		Copy Right	4,44,475.00

	Long Term Debt	55,46,833.33
		Bank	55,46,833.33

	Entry for the Year ended December 2017
	Depriciation on Building	16,26,951.85
	Depriciation on Equipments	40,02,000.00
	Amortisation on Customer List	31,055.00
	Amortisation on Copy Right	4,44,475.00
		Building	16,26,951.85
		Equipment	40,02,000.00
		Customer List	31,055.00
		Copy Right	4,44,475.00

	Long Term Debt	55,46,833.33
		Bank	55,46,833.33

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