On January 2, 2013, Page Corporation acquired a 90% interest in Salcedo Company for $3,500,000. At that

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On January 2, 2013, Page Corporation acquired a 90% interest in Salcedo Company for $3,500,000. At that time Salcedo Company had capital stock of $2,250,000 and retained earnings of $1,250,000. The book values of Salcedo Company's assets and liabilities were equal to their fair values except for land and bonds payable.

The land had a fair value of $200,000 and a book value of $120,000. The outstanding bonds were issued on January 1, 2008, at 9% and mature on January 1, 2018. The bonds' principal is $500,000 and the current yield rate on similar bonds is 6%.

Required:

A. Assuming interest is paid annually, prepare a Computation and Allocation Schedule for the difference between book value and the value implied by the purchase price in the consolidated statements workpaper on the acquisition date.

B. Prepare the workpaper entries necessary on December 31, 2013, to allocate and depreciate the difference between book value and the value implied by the purchase price.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Advanced Accounting

ISBN: 978-1119119364

6th edition

Authors: Debra Jeter, Paul Chaney

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