Question: On January 1 2010 Hi Speed com acquired 100 percent of the

On January 1, 2010, acquired 100 percent of the common stock of Wi-Free Co. for cash of $730,000. The consideration transferred was allocated among Wi-Free’s net assets as follows:

At the acquisition date, the computer software had a 4-year remaining life, and the Internet domain name was estimated to have a 10-year life. By the end of 2010, it became clear that the acquired in process research and development would yield no economic benefits and recognized an impairment loss. At December 31, 2011, Wi-Free’s accounts payable include a $30,000 amount owed to Hi-Speed.
The December 31, 2011, trial balances for the parent and subsidiary follow:

a. Using Excel, prepare calculations showing how Hi-Speed derived the $856,000 amount for its investment in Wi-Free.
b. Using Excel, compute consolidated balances for Hi-Speed and Wi-Free. Either use a worksheet approach or compute the balancesdirectly.

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  • CreatedOctober 04, 2014
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