Venus Corporation purchases 70% of the common stock of Starnes Company for $700,000. At the time...

 

 

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Venus Corporation purchases 70% of the common stock of Starnes Company for $700,000. At the time of purchase, Starnes has the following balance sheet: Starnes Company Balance Sheet December 31, 2019 Assets Cash equivalents Inventory Liabilities and Equity 110,000 Accounts Payable 90,000 Bonds Payable 80,000 Stockholder's Equity 400,000 Common Stock ($5 par) 210,000 Paid-in Capital in excess of par Retained Earnings 1,000,000 Total Liabilities and Equity 200,000 300,000 Land Building (net) Equipment (net) 100,000 160,000 350,000 1,000,000 Total Assets The fair value of the assets are as follows: Fair Value 110,000 220,000 120,000 480,000 190,000 730,000 Cash equivalents Inventory Land Building Equipment Required: 1. Prepare the value analysis schedule and the determination and distribution of excess schedule for the investment in Starnes Company. 2. Prepare the elimination entries that would be made on a consolidation worksheet prepared on the date of purchase. Company Implied Parent Price Fair Value NCI Value 1. Value Analysis Schedule Company Fair Value Fair Value of Net Assets Excluding Goodwill Goodwill Gain on acquisition Determination and Distribution of Excess Schedule Company Implied Value Parent Price % NCI Value Fair Value of Subsidiary Less Book Value of Interest Acquired Common Stock Paid in Excess Retained Earnings Total Equity Interest Acquired Book Value Excess of Fair Value over Book Value Adjustment of identifiable accounts: Worksheet Account Adjustment key debit D1 debit D2 debit D3 credit D4 debit D5 Total 2. Prepare the elimination entries below: Debit Credit Venus Corporation purchases 70% of the common stock of Starnes Company for $700,000. At the time of purchase, Starnes has the following balance sheet: Starnes Company Balance Sheet December 31, 2019 Assets Cash equivalents Inventory Liabilities and Equity 110,000 Accounts Payable 90,000 Bonds Payable 80,000 Stockholder's Equity 400,000 Common Stock ($5 par) 210,000 Paid-in Capital in excess of par Retained Earnings 1,000,000 Total Liabilities and Equity 200,000 300,000 Land Building (net) Equipment (net) 100,000 160,000 350,000 1,000,000 Total Assets The fair value of the assets are as follows: Fair Value 110,000 220,000 120,000 480,000 190,000 730,000 Cash equivalents Inventory Land Building Equipment Required: 1. Prepare the value analysis schedule and the determination and distribution of excess schedule for the investment in Starnes Company. 2. Prepare the elimination entries that would be made on a consolidation worksheet prepared on the date of purchase. Company Implied Parent Price Fair Value NCI Value 1. Value Analysis Schedule Company Fair Value Fair Value of Net Assets Excluding Goodwill Goodwill Gain on acquisition Determination and Distribution of Excess Schedule Company Implied Value Parent Price % NCI Value Fair Value of Subsidiary Less Book Value of Interest Acquired Common Stock Paid in Excess Retained Earnings Total Equity Interest Acquired Book Value Excess of Fair Value over Book Value Adjustment of identifiable accounts: Worksheet Account Adjustment key debit D1 debit D2 debit D3 credit D4 debit D5 Total 2. Prepare the elimination entries below: Debit Credit

Answer rating: 100% (QA)

Book value Fair value Cash equivalents 110000 110000 Inventory 200000 220000 Land 80000 120000 Build... View the full answer