Use the preceding information for Purnells purchase of Sentinel common stock. Assume Purnell exchanges 10,000 shares of

Question:

Use the preceding information for Purnell’s purchase of Sentinel common stock. Assume Purnell exchanges 10,000 shares of its own stock for 80% of the common stock of Sentinel. The stock has a market value of $50 per share and a par value of $1. Purnell has the following trial balance immediately after the purchase:

Cash Accounts Receivable Inventory Investment in Sentinel Land Buildings Accumulated Depreciation Equipment

Purnell Corporation acquires Sentinel Corporation on December 31, 2015. Sentinel has the following balance sheet on the date of acquisition:

Accounts receivable Inventory Land Buildings Accumulated depreciation Equipment Accumulated depreciation

An appraisal is performed to determine whether the book values of Sentinel’s net assets reflect their fair values. The appraiser also determines that intangible assets exist, although they are not recorded. The following fair values for assets and liabilities are agreed upon:

Accounts receivable Inventory Land. Buildings Equipment Patent. Computer software Current liabilities Bonds

Required

1. Prepare the value analysis schedule and the determination and distribution of excess schedule for the investment in Sentinel.
2. Complete a consolidated worksheet for Purnell Corporation and its subsidiary Sentinel Corporation as of December 31, 2015.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Advanced Accounting

ISBN: 978-1305084858

12th edition

Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng

Question Posted: