Use the preceding information for Purnells purchase of Sentinel common stock. Assume Purnell exchanges 19,000 shares of

Question:

Use the preceding information for Purnell€™s purchase of Sentinel common stock. Assume Purnell exchanges 19,000 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:
Purnell Corporation
Trial Balance
December 31, 2011
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,000
Investment in Sentinel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 950,000
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800,000
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (500,000)
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (230,000)
Current Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (150,000)
Bonds Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300,000)
Common Stock ($1 par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (92,000)
Paid-In Capital in Excess of Par . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,508,000)
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,100,000)
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
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, 2011.
Purnell Corporation acquires Sentinel Corporation on December 31, 2011. Sentinel has the following balance sheet on the date of acquisition:
Use the preceding information for Purnell€™s purchase of Sentinel common

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 . . . . . . . . . . $ 50,000
Inventory . . . . . . . . . . . . . . . . . . . 100,000
Land. . . . . . . . . . . . . . . . . . . . . . . 200,000
Buildings . . . . . . . . . . . . . . . . . . . 400,000
Equipment . . . . . . . . . . . . . . . . . . 200,000
Patent. . . . . . . . . . . . . . . . . . . . . . 150,000
Computer software . . . . . . . . . . . 50,000
Current liabilities . . . . . . . . . . . . . 90,000
Bonds payable . . . . . . . . . . . . . . 210,000

Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
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Advanced Accounting

ISBN: 978-0538480284

11th edition

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

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