Question

Detner International purchases 80% of the outstanding stock of Hardy Company for $1,600,000 on January 1, 2015. At the purchase date, the inventory, equipment, and patents of Hardy Company have fair values of $10,000, $50,000, and $100,000, respectively, in excess of their book values. The other assets and liabilities of Hardy Company have book values equal to their fair values. The inventory is sold during the month following the purchase. The two companies agree that the equipment has a remaining life of eight years and the patents 10 years. On the purchase date, the owners’ equity of Hardy Company is as follows:
Common stock ($10 stated value).... .. . . . . . .. . . . $1,000,000
Additional paid-in capital in excess of par .. . . .. . . . 300,000
Retained earnings . . . . . . . . .. .. .. .... . . . .. . . .. . . 400,000
Total equity .. .. . . .. . .. .. .. .... .. . .. . . .. . . . . . . . . $1,700,000
During 2015 and 2016, Hardy Company has income and pays dividends as follows:
The trial balances of the two companies as of December 31, 2017, shown below
The remaining excess of cost over book value is attributable to goodwill.
Required
1. Prepare the original value analysis and a determination and distribution of excess schedule for the investment.
2. Prepare the consolidated worksheet for December 31, 2017. Include columns for the eliminations and adjustments, the consolidated income statement, the controlling retained earnings, and the consolidated balance sheet.


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  • CreatedApril 13, 2015
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