On January 1, 2017, Dirt Company acquired all of Cat Company's voting stock for $16,000 in...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 2017, Dirt Company acquired all of Cat Company's voting stock for $16,000 in cash. Some of Cats identifiable assets at the date of acquisition had fair values that are different from reported values, as follows: Fair Вook Value Value Plant assets, net (20-year remaining life, straight-line) 3000 11,000 Identifiable intangibles that should be capitalized (5-vesar remaining life, straight-line) 10,000 Cat's total shareholders' equity at January 1, 2017, was $4.000. It is now December 31, 2020 (four years later). Cumulative impaiment for the goodwill recognized on this acquisition, to the beginning of 2020, is $2,000. Goodwill impairment for 2020 is $500. Dirt uses the complete equity method to account for its investment in Cat Company on its own books. December 31,2020 trial balances for Dirt and Cat sppear below. Dirt Cat Company Company DR (CR) $ 5,000 34,800 23,600 (22,000) (15,000) (25,000) (25,000) (400) DR (CR) Current assets 2,500 28,000 Plant assets, net Investment in Cat Company Liabilities Capital Stock Retained Earnings, Jan. 1 Sales Revenue Equity in net income of Cat (10,000) (2,000) (16,000) (14,000) Cost of Sales Operating Expenses Total 20,000 4,000 SO 8,000 3,500 $0 Required: You should use cell references in providing a number or preparing a calculations by referencing the data above. Prepare you answer in the solution area provided below. a. Compute goodwill at acquisition. Make sure I can follow how you developed goodwill. b. Prepare the working paper to consolidate Dirt and Cat's trial balances at December 31, 2020. You must designate your elimination entries appropriately C. E. R, O. C- Current - eliminate the current year equity method entries E- Equity - eliminate the subsidiary's beginning-of-current-year equity balances R- Revalue - recognize the beginning-of-current-year fair value revaluations O- Write-Off - recognize current year revaluation write-offs Your working should be set up like Exhibit 4.1 on page 133, which designates the elimination entries. c. Prepare the consolidated income statement for 2020 and the consolidated balance sheet at December 31, 2020 in good form. On January 1, 2017, Dirt Company acquired all of Cat Company's voting stock for $16,000 in cash. Some of Cats identifiable assets at the date of acquisition had fair values that are different from reported values, as follows: Fair Вook Value Value Plant assets, net (20-year remaining life, straight-line) 3000 11,000 Identifiable intangibles that should be capitalized (5-vesar remaining life, straight-line) 10,000 Cat's total shareholders' equity at January 1, 2017, was $4.000. It is now December 31, 2020 (four years later). Cumulative impaiment for the goodwill recognized on this acquisition, to the beginning of 2020, is $2,000. Goodwill impairment for 2020 is $500. Dirt uses the complete equity method to account for its investment in Cat Company on its own books. December 31,2020 trial balances for Dirt and Cat sppear below. Dirt Cat Company Company DR (CR) $ 5,000 34,800 23,600 (22,000) (15,000) (25,000) (25,000) (400) DR (CR) Current assets 2,500 28,000 Plant assets, net Investment in Cat Company Liabilities Capital Stock Retained Earnings, Jan. 1 Sales Revenue Equity in net income of Cat (10,000) (2,000) (16,000) (14,000) Cost of Sales Operating Expenses Total 20,000 4,000 SO 8,000 3,500 $0 Required: You should use cell references in providing a number or preparing a calculations by referencing the data above. Prepare you answer in the solution area provided below. a. Compute goodwill at acquisition. Make sure I can follow how you developed goodwill. b. Prepare the working paper to consolidate Dirt and Cat's trial balances at December 31, 2020. You must designate your elimination entries appropriately C. E. R, O. C- Current - eliminate the current year equity method entries E- Equity - eliminate the subsidiary's beginning-of-current-year equity balances R- Revalue - recognize the beginning-of-current-year fair value revaluations O- Write-Off - recognize current year revaluation write-offs Your working should be set up like Exhibit 4.1 on page 133, which designates the elimination entries. c. Prepare the consolidated income statement for 2020 and the consolidated balance sheet at December 31, 2020 in good form.
Expert Answer:
Answer rating: 100% (QA)
Required solution of all three parts are given below Part A Computation of goodwill at acquisition C... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-1285867977
14th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
Students also viewed these accounting questions
-
It is now December 31, 2012, and a jury just found in favour of a woman who sued the city for injuries sustained in a January 2011 accident. She requested recovery of lost wages, plus $100,000 for...
-
It is now December 31, 2014 (t = 0) , and a jury just found in favor of a woman who sued the city for injuries sustained in a January 2013 accident. She requested recovery of lost wages plus $100,000...
-
It is now December 31, 2011 (t = 0), and a jury just found in favor of a woman who sued the city for injuries sustained in a January 2010 accident. She requested recovery of lost wages plus $100,000...
-
Inferring Investing and Financing Transactions and Preparing a Balance Sheet During its first week of operations ending January 7, 2011, FastTrack Sports Inc. completed six transactions with the...
-
How can organizations benefit by convergence of mobile software technology with wired desktop technology?
-
Consider an LTI system that is stable and for which H(z), the z-transform of the impulse response, is given by Suppose x[n], the input to the system, is a unit step sequence. (a)Find the output y[n]...
-
This appeal involves the validity of a will executed in contravention of an earlier contract to make mutual wills. A husband and wife signed a contract to make mutual wills and then executed those...
-
The following transactions of Denver Pharmacies occurred during 2011 and 2012: Requirement 1. Journalize the transactions in Denvers general journal. Explanations are notrequired. 2011 Purchased...
-
Ruler Formula Bar Normal Page Break Page Custom Preview Layout Views Gridlines Headings Zoom 100% Zoom To Selection Window Macros Workbook Views Show Zoom Macros A A1 V A B D E F G H 4 Assume That...
-
For each of the following independent cases, fill in the blank with the appropriate dollar amount. Assets - Liabilities + Owners' Equity $ 75,000 Case 1 Case 2 Case 3 $125,000 400,000 100,000 95,000...
-
Kailees Cookery Pty Ltd sells ovens and access to online cooking classes. On 1 May 2020, Kailees Cookery Pty Ltd signs an agreement with Chef School to provide 15 weekly online cooking classes and...
-
A contract that is full of hard-to-read print and hard-to-understand language and that is presented to someone who is not given an opportunity to read it is a. always unenforceable. b. always...
-
When persons reach the age of majority, they can no longer disaffirm a contract. (True/False)
-
Driving his car negligently, Paul crashes into a light pole. The pole falls, smashing through the roof of a house onto Karl, who is killed. But for Pauls negligence, Karl would not have died....
-
Bento files a lawsuit against Ricos. Bento believes that it has both the law and the facts on its side. At the end of the trial, however, the jury decides against Bento, and the judge issues a ruling...
-
Using a domain name that is similar but not identical to the trademark of another is legal. (True/False)
-
Bookmark question for later What is a graphic rating scale? Where raters rate the extent to which the job involves the comparison factor Where raters rate the extent to which the job involves the...
-
When the concentration of a strong acid is not substantially higher than 1.0 10-7 M, the ionization of water must be taken into account in the calculation of the solution's pH. (a) Derive an...
-
If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?
-
TransWorld Communications Inc., a large telecommunications company, is evaluating the possible acquisition of Georgia Cable Company (GCC), a regional cable company. TransWorld's analysts project the...
-
Bartley Barstools has a market/book ratio equal to 1. Its stock price is $14 per share and it has 5 million shares outstanding. The firm's total capital is $125 million and it finances with only debt...
-
A summary of the Balgreen Bowling Club's cash book is shown below. From it, and the additional information, you are to construct an income and expenditure account for the year ending 31 December...
-
Why do you think non-profit-oriented organizations prepare receipts and payments accounts when they have all this information in the cash book already?
-
The following trial balance of the Grampian Golf Club was extracted from the books as on 31 December 2016: (1) Bar purchases and sales were on a cash basis. Bar inventory at 31 December 2016 was...
Study smarter with the SolutionInn App