In: Accounting
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.
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 |