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modern advanced accounting
Advanced Accounting 7th edition Debra C. Jeter, Paul K. Chaney - Solutions
On December 1, 2019, King Company exported equipment that had cost $210,000 to a Brazilian company for 1,000,000 real. The account is to be settled on January 31, 2020. King Company is a calendar-year company and uses a perpetual inventory system. Direct exchange rates were:
GAF manufactures electrical cells at its St. Louis facility. The company?s fiscal year-end is September 30. It has adopted the perpetual inventory cost flow method to control inventory costs. The company entered into the following transactions during the month of September. All exchange rates are
This problem uses the information from Problem 11-4 or Problem 11-5. Recall that on January 1, 2019, P Company, a European based-company, purchased 80% of S Company for €200,000 (when the common stock account was 80,000, other contributed capital was 50,000, and retained earnings were 40,000).
This problem is a continuation of the problem in Section 11.5 of the chapter. In the chapter, the workpaper was prepared for the year of the acquisition. In this problem, the consolidated statements are prepared for the second year after acquisition. On January 1, 2019, P Company, a European
PMC acquired 100% of S Company for 200,000 when the fair value of the identifiable net assets was 160,000. PMC operates in three geographical regions: Europe, North America, and South America. Each region is classified as a CGU (each unit generates cash independently of the other regions). All
Nokia reported 2017 operating income on the Income Statement by subtracting expenses listed by function (i.e., selling, general, and administration) as seen below: In footnotes 8 and 10, they list the expenses and other income by nature: Required: A. Does Nokia report expenses on the income
Air France?KLM Group reports the following balance sheet for the year ended December 31, 2013. Required: A. In what order are assets listed on the balance sheet? B. Comment on other differences (IFRS relative to U.S. GAAP) that you might notice on the balance sheet. C. What is the current
ASM International is a Dutch Public liability company domiciled in the Netherlands. Since ASM International?s initial listing on Nasdaq, ASMI has followed accounting principles generally accepted in the United States (?US GAAP?), both for internal as well as external purposes. In reconciling its
Caterpillar uses U.S. GAAP when preparing its consolidated financial statements. Information concerning inventories from their 2017 annual report is as follows: Inventories are stated at the lower of cost or net realizable value. Cost is principally determined using the last-in, first-out (LIFO)
The first two lines of Unilever Group?s 2013 consolidated income statement (using IFRS) report the following amounts (in millions of euros): Required: A. On the income statement, the first two lines in Unilever?s income statement are turnover and operating profit. What does the term turnover
Ferrari disclosed the following concerning research and development in their 2017 annual report: Development costs for car project production and related components, engines and systems are recognized as an asset if, and only if, both of the following conditions under IAS 38—Intangible Assets are
British Petroleum?s income statement was prepared using IFRS is presented below (in $ millions). ExxonMobil Corporation?s income statement prepared using U.S. GAAP is presented below (in $ millions). Required: A. Are expenditures reported on BP?s income statement reported by function or by
Prather Company owns 80% of the common stock of Stone Company. The stock was purchased for $960,000 on January 1, 2017, when Stone Company?s retained earnings were $675,000. On January 1, 2019, Stone Company sold fixed assets to Prather Company for $960,000; Stone Company had purchased these assets
Prout Company owns 80% of the common stock of Sexton Company. The stock was purchased for $1,600,000 on January 1, 2017, when Sexton Company?s retained earnings were $800,000. On January 1, 2019, Prout Company sold fixed assets to Sexton Company for $360,000. These assets were originally purchased
Platt Company acquired an 80% interest in Sloane Company when the retained earnings of Sloane Company were $300,000. On January 1, 2019, Sloane Company recorded a $250,000 gain on the sale to Platt Company of equipment with a remaining life of five years. On January 1, 2020, Platt Company recorded
Padilla Company acquired 90% of the outstanding common stock of Sanchez Company on June 30, 2019, for $426,000. On that date, Sanchez Company had retained earnings in the amount of $60,000, and the fair value of its recorded assets and liabilities was equal to their book value. The excess of
Prather Company owns 80% of the common stock of Stone Company. The stock was purchased for $960,000 on January 1, 2017, when Stone Company?s retained earnings were $675,000. On January 1, 2019, Stone Company sold fixed assets to Prather Company for $960,000; Stone Company had purchased these assets
Pomeroy Corporation owns an 80% interest in Sherer Company and a 90% interest in Tampa Company. On January 2, 2019, Tampa Company sold equipment with a book value of $600,000 to Sherer Company for $780,000. This equipment has a remaining useful life of three years. Sherer Company reported $100,000
Using the information presented in Problem 7-10 prepare a consolidated financial statements workpaper for the year ended December 31, 2020, using the trial balance format. Prout Company Sexton Company Current Assets $ 568,000 $ 271,000 Fixed Assets 1,972,000 830,000 Other Assets 1,000,800
Pinta Company, a forklift manufacturer, owns 80% of the voting stock of Standard Company. On January 1, 2019, Pinta Company sold forklifts to Standard Company for $400,000. The forklifts, which represented inventory to Pinta Company, had a cost to Pinta Company of $310,000. The management of
Prout Company owns 80% of the common stock of Sexton Company. The stock was purchased for $1,600,000 on January 1, 2017, when Sexton Company?s retained earnings were $800,000. On January 1, 2019, Prout Company sold fixed assets to Sexton Company for $360,000. These assets were originally purchased
During 2018, Pier One Company billed its 80% owned subsidiary, Scale Company, $700,000 for architectural services. The cost to Pier One Company of providing the services was $400,000 for salaries and $150,000 for other operating expenses. Scale Company charged the architecture fees to the cost of a
Pierce Company acquired a 90% interest in Sanders Company on January 1, 2019, for $1,480,000. At this time, Sanders Company?s common stock and retained earnings balances were $1,000,000 and $500,000, respectively. An examination of the books of Sanders on the date of purchase revealed the
P Company owns 80% of the outstanding stock of S Company. The 2020 sales of S Company included revenue of $390,000 consisting of consulting services billed to P Company at cost plus 30%. P Company was billed the full $390,000; of this amount, $260,000 was charged to selling expenses and $130,000
On January 1, 2018, Phelps Company purchased an 85% interest in Sloane Company for $955,000 when the retained earnings of Sloane Company were $150,000. The difference between implied and book value was assigned as
Parsons Company acquired 90% of the outstanding common stock of Shea Company on June 30, 2019, for $426,000. On that date, Shea Company had retained earnings in the amount of $60,000, and the fair value of its recorded assets and liabilities was equal to their book value. The excess of implied
On January 1, 2018, Price Company acquired an 80% interest in the common stock of Smith Company on the open market for $750,000, the book value at that date. On January 1, 2019, Price Company purchased new equipment for $14,500 from Smith Company. The equipment cost $9,000 and had an estimated
Pitts Company owns 80% of the common stock of Shannon Company. The stock was purchased for $960,000 on January 1, 2017, when Shannon Company?s retained earnings were $675,000. On January 1, 2019, Shannon Company sold fixed assets to Pitts Company for $960,000; Shannon Company had purchased these
P Company owns 90% of the outstanding common stock of S Company. On January 1, 2020, S Company sold land to P Company for $600,000. S Company originally purchased the land for $400,000.On January 1, 2021, P Company sold the land purchased from S Company to a company outside the affiliated group
Using the information presented in Problem 7-4, prepare a consolidated financial statements workpaper for the year ended December 31, 2020, using the trial balance format. Prout Company $ 568,000 Sexton Company $ 271,000 830,000 Current Assets Fixed Assets 1,972,000 Other Assets 1,000,800
Patterson Company owns 80% of the outstanding common stock of Stevens Company. On June 30, 2018, land costing $500,000 is sold by one affiliate to the other for $800,000.Required:Prepare in general journal form the workpaper entries necessary because of the intercompany sale of land in the
Prout Company owns 80% of the common stock of Sexton Company. The stock was purchased for $1,600,000 on January 1, 2017, when Sexton Company?s retained earnings were $800,000. On January 1, 2019, Prout Company sold fixed assets to Sexton Company for $360,000. These assets were originally purchased
Procter Company owns 90% of the outstanding stock of Silex Company. On January 1, 2019, Silex Company sold land to Procter Company for $350,000. Silex had originally purchased the land on June 30, 2010, for $200,000.Procter Company plans to construct a building on the land bought from Silex in
On January 1, 2020, P Company purchased equipment from its 80% owned subsidiary for $600,000. The carrying value of the equipment on the books of S Company was $450,000. The equipment had a remaining useful life of six years on January 1, 2020. On January 1, 2021, P Company sold the equipment to an
Pearson Company owns 90% of the outstanding common stock of Spring Company. On January 1, 2019, Spring Company sold equipment to Pearson Company for $200,000. Spring Company had purchased the equipment for $300,000 on January 1, 2009, and had depreciated it using a 10% straight-line rate. The
Pico Company, a truck manufacturer, owns 90% of the voting stock of Seward Company. On January 1, 2019, Pico Company sold trucks to Seward Company for $350,000. The trucks, which represented inventory to Pico Company, had a cost to Pico Company of $260,000. The management of Seward Company
Powell Company owns 80% of the outstanding common stock of Sullivan Company. On June 30, 2019, Sullivan Company sold equipment to Powell Company for $500,000. The equipment cost Sullivan Company $780,000 and had accumulated depreciation of $400,000 on the date of the sale. The management of Powell
On January 1, 2018, Porsche Company acquired 100% of Saab Company?s stock for $450,000 cash. The fair value of Saab?s identifiable net assets was $375,000 on this date. Porsche Company decided to measure goodwill impairment using comparable prices of similar businesses to estimate the fair value of
A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2019. The capital stock balance of Saxton Corporation was $3,000,000 on this date, and the balance in retained earnings was $1,000,000. The cost of the investment to Palm Incorporated was $3,750,000. The balance
A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2019. The capital stock balance of Saxton Corporation was $3,000,000 on this date, and the balance in retained earnings was $1,000,000. The cost of the investment to Palm Incorporated was $3,750,000. The balance
Pascal Corporation purchased 90% of the stock of Salzer Company for $2,070,000 on January 1, 2020. On this date, the fair value of the assets and liabilities of Salzer Company was equal to their book value except for the inventory and equipment accounts. The inventory had a fair value of $725,000
A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2019. The capital stock balance of Saxton Corporation was $3,000,000 on this date, and the balance in retained earnings was $1,000,000. The cost of the investment to Palm Incorporated was $3,750,000. The balance
On January 1, 2018, Piper Company acquired an 80% interest in Sand Company for $2,276,000. At that time the capital stock and retained earnings of Sand Company were $1,800,000 and $700,000, respectively. Differences between the fair value and the book value of the identifiable assets of Sand
On January 2, 2018, 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
On January 1, 2018, Point Corporation acquired an 80% interest in Sharp Company for $2,000,000. At that time Sharp Company had capital stock of $1,500,000 and retained earnings of $700,000. The book values of Sharp Company’s assets and liabilities were equal to their fair values except for land
Padilla Company purchased 80% of the common stock of Sanoma Company in the open market on January 1, 2018, paying $31,000 more than the book value of the interest acquired. The difference between book value and the value implied by the purchase price is attributable to land.Required:A. What
Meredith Company and Kyle Company were combined in a purchase transaction. Meredith was able to acquire Kyle at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Meredith. A determination was
On January 1, 2019, Packard Company purchased an 80% interest in Sage Company for $600,000. On this date Sage Company had common stock of $150,000 and retained earnings of $400,000. Sage Company’s equipment on the date of Packard Company’s purchase had a book value of $400,000 and a fair value
Park Company acquires an 85% interest in Sunland Company on January 2, 2020. The resulting difference between book value and the value implied by the purchase price in the amount of $120,000 is entirely attributable to equipment with an original life of 15 years and a remaining useful life, on
On January 1, 2019, P Company purchased an 80% interest in S Company for $600,000, at which time S Company had retained earnings of $300,000 and capital stock of $350,000. Any difference between book value and the value implied by the purchase price was entirely attributable to a patent with a
On January 1, 2020, Porter Company purchased an 80% interest in Salem Company for $260,000. On this date, Salem Company had common stock of $207,000 and retained earnings of $130,500. An examination of Salem Company?s balance sheet revealed the following comparisons between book and fair
Pace Company purchased 20,000 of the 25,000 shares of Saddler Corporation for $525,000. On January 3, 2019, the acquisition date, Saddler Corporation?s capital stock and retained earnings account balances were $500,000 and $100,000, respectively. The following values were determined for Saddler
The ?goodwill? footnote for American Oriental Bioengineering 2011 10K is shown below. When firms make acquisitions, the goodwill recorded in an acquisition must be assigned to a reportable segment. See Chapter 14 for a complete discussion of segmental reporting. Thus a reportable segment (such as
On January 1, 2020, Payne Corporation purchased a 75% interest in Salmon Company for $585,000. A summary of Salmon Company?s balance sheet on that date revealed the following: The equipment had an original life of 15 years and has a remaining useful life of 10 years. Required: For the December
On January 1, 2018, Pam Company purchased an 85% interest in Shaw Company for $540,000. On this date, Shaw Company had common stock of $400,000 and retained earnings of $140,000. An examination of Shaw Company?s assets and liabilities revealed that their book value was equal to their fair value
On November 21, 2016, Tesla acquired SolarCity by issuing stock valued at $2.146 billion dollars. Tesla issued 11,124,497 shares of 0.001 par value common stock.On the date of acquisition, the allocation of the purchase consideration was as follows (condensed) (dollars in thousands):Assets
On January 1, 2019, Polar Company, which owns an 80% interest in Superior Company, sold Superior Company equipment with a book value of $400,000 for $560,000. The equipment had an estimated remaining useful life of eight years on the date of the intercompany sale. Polar Company reported net income
On January 1, 2019, Sherwood Company, an 80% owned subsidiary of Paradise Company, sold to Paradise Company equipment with a book value of $600,000 for $840,000. The equipment had an estimated remaining useful life of eight years on the date of the intercompany sale. Paradise Company reported net
On January 1, 2018, Perry Company purchased 80% of Selby Company for $960,000. At that time Selby had capital stock outstanding of $400,000 and retained earnings of $400,000. The fair value of Selby Company?s assets and liabilities is equal to their book value except for the following: One-half
Paque Corporation owns 90% of the common stock of Segal Company. The stock was purchased for $810,000 on January 1, 2017, when Segal Company?s retained earnings were $150,000. Financial data for 2021 are presented here: The January 1, 2021, inventory of Paque Corporation includes $45,000 of
Pruitt Corporation owns 90% of the common stock of Sedbrook Company. The stock was purchased for $540,000 on January 1, 2017, when Sedbrook Company?s retained earnings were $100,000. Preclosing trial balances for the two companies at December 31, 2021, are presented here: The January 1, 2021,
On January 1, 2017, Paul Company purchased 80% of the voting stock of Simon Company for $1,360,000 when Simon Company had retained earnings and capital stock in the amounts of $450,000 and $1,000,000, respectively. The difference between implied and book value is allocated to a franchise and is
On January 1, 2018, Perry Company purchased 80% of Selby Company for $960,000. At that time Selby had capital stock outstanding of $400,000 and retained earnings of $400,000. The fair value of Selby Company?s assets and liabilities is equal to their book value except for the following: One-half
Paque Corporation owns 90% of the common stock of Segal Company. The stock was purchased for $810,000 on January 1, 2017, when Segal Company?s retained earnings were $150,000. Financial data for 2021 are presented here: The January 1, 2021, inventory of Paque Corporation includes $45,000 of
Pruitt Corporation owns 90% of the common stock of Sedbrook Company. The stock was purchased for $540,000 on January 1, 2017, when Sedbrook Company?s retained earnings were $100,000. Preclosing trial balances for the two companies at December 31, 2021, are presented here: The January 1, 2021,
Penn Company owns a 90% interest in Salvador Company and an 80% interest in Sencal Company. Profit remaining in ending inventories from intercompany sales for 2019 and 2020 is indicated below. Salvador Company reported net income of $50,000 in 2019 and $45,000 in 2020, whereas Sencal Company?s
On January 1, 2017, Perry Company purchased 80% of Selby Company for $990,000. At that time Selby had capital stock outstanding of $350,000 and retained earnings of $375,000. The fair value of Selby Company?s assets and liabilities is equal to their book value except for the following: One-half
On January 2, 2019, Patten Company purchased a 90% interest in Sterling Company for $1,400,000. At that time Sterling Company had capital stock outstanding of $800,000 and retained earnings of $425,000. The difference between book value of equity acquired and the value implied by the purchase price
Paque Corporation owns 90% of the common stock of Segal Company. The stock was purchased for $810,000 on January 1, 2017, when Segal Company?s retained earnings were $150,000. Financial data for 2021 are presented here: The January 1, 2021, inventory of Paque Corporation includes $45,000 of
Pruitt Corporation owns 90% of the common stock of Sedbrook Company. The stock was purchased for $625,500 on January 1, 2017, when Sedbrook Company?s retained earnings were $95,000. Preclosing trial balances for the two companies at December 31, 2021, are presented here: The January 1, 2021,
Pace Company owns 85% of the outstanding common stock of Sand Company and all the outstanding common stock of Star Company. During 2020, the affiliates engaged in intercompany sales as follows: Sales of MerchandisePace to Sand......................$ 40,000Sand to
Peer Company owns 80% of the common stock of Seacrest Company. Peer Company sells merchandise to Seacrest Company at 25% above its cost. During 2019 and 2020 such sales amounted to $265,000 and $475,000, respectively. The 2019 and 2020 ending inventories of Seacrest Company included goods
Shell Company, an 85% owned subsidiary of Plaster Company, sells merchandise to Plaster Company at a markup of 20% of selling price. During 2019 and 2020, intercompany sales amounted to $442,500 and $386,250, respectively. At the end of 2019, Plaster had one-half of the goods that it purchased that
Peel Company owns 90% of the common stock of Seacore Company. Seacore Company sells merchandise to Peel Company at 20% above cost. During 2019 and 2020, such sales amounted to $436,000 and $532,000, respectively. At the end of each year, Peel Company had in its inventory one-fourth of the goods
Peat Company owns a 90% interest in Seaton Company. The consolidated income statement drafted by the controller of Peat Company appeared as follows: During your audit you discover that intercompany sales transactions were not reflected in the controller?s draft of the consolidated income
Refer to Exercise 6‑7. Using the same figures, assume that the sales were upstream instead of downstream.Exercise 6‑7Perkins Company owns 85% of Sheraton Company. Perkins Company sells merchandise to Sheraton Company at 20% above cost. During 2019 and 2020, such sales amounted to $450,000 and
Perkins Company owns 85% of Sheraton Company. Perkins Company sells merchandise to Sheraton Company at 20% above cost. During 2019 and 2020, such sales amounted to $450,000 and $486,000, respectively. At the end of each year, Sheraton Company had in its inventory onethird of the amount of goods
Payne Company owns all the outstanding common stock of Sierra Company and 80% of the outstanding common stock of Santa Fe Company. The amount of intercompany profit included in the inventories of Payne Company on December 31, 2019, and December 31, 2020, is indicated here: The three companies
Refer to Exercise 6‑4. Using the same figures, assume that the merchandise mentioned was included in Pearce’s inventory, having been purchased from Searl.375,000 to equipment of Searl Company with a five-year remaining life.187,500 to land held by Searl Company.112,500 to inventory of Searl
On January 1, 2019, Pearce Company purchased an 80% interest in the capital stock of Searl Company for $2,460,000. At that time, Searl Company had capital stock of $1,500,000 and retained earnings of $300,000. The difference between book of value Searl equity and the value implied by the purchase
Peabody Company owns 90% of the outstanding capital stock of Sloane Company. During 2019 and 2020 Sloane Company sold merchandise to Peabody Company at a markup of 25% of selling price. The selling price of the merchandise sold during the two years was $20,800 and $25,000, respectively. At the end
Refer to Exercise 6‑1. Calculate the amount of the noncontrolling interest to be deducted from consolidated income in arriving at 2019 controlling interest in consolidated net income.Exercise 6‑1P Company owns 80% of the outstanding stock of S Company. During 2019, S Company reported net income
P Company owns 80% of the outstanding stock of S Company. During 2019, S Company reported net income of $525,000 and declared no dividends. At the end of the year, S Company’s inventory included $487,500 in unrealized profit on purchases from P Company. Intercompany sales for 2019 totaled
On January 1, 2020, Pruitt Company issued 25,500 shares of its common stock ($2 par) in exchange for 85% of the outstanding common stock of Shah Company. Pruitt?s common stock had a fair value of $28 per share at that time. Pruitt Company uses the cost method to account for its investment in Shah
The Mcquire Company is considering acquiring 100% of the Sosa Company. The management of Mcquire fears that the acquisition price may be too high. Condensed financial statements for Sosa Company for the current year are as follows: Income Statement ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
On January 1, 2019, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company?s stockholders? equity consisted of the following: Common stock..........................$500,000 Retained earnings......................190,000 An
On January 1, 2018, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At that time, Salem Company had capital stock of $550,000 and retained earnings of $80,000. Porter Company uses the complete equity method to record its investment in Salem Company.
On January 2, 2019, Press Company purchased on the open market 90% of the outstanding common stock of Sensor Company for $800,000 cash. Balance sheets for Press Company and Sensor Company on January 1, 2019, just before the stock acquisition by Press Company, were: The full implied value of
On January 1, 2019, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company?s stockholders? equity consisted of the following: Common stock.............................$500,000 Retained earnings..........................190,000 An
On January 1, 2018, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At that time, Salem Company had capital stock of $550,000 and retained earnings of $80,000. Porter Company uses the partial equity method to record its investment in Salem Company.
Pearson Company purchased a 100% interest in Sanders Company and a 90% interest in Taylor Company on January 2, 2019, for $800,000 and $1,300,000, respectively. The account balances and fair values of the acquired companies on the acquisition date were as follows: Sanders Company?s equipment has
On January 1, 2019, Pump Company acquired all the outstanding common stock of Sound Company for $556,000 in cash. Financial data relating to Sound Company on January 1, 2019, are presented here: Sound Company would expect to pay 10% interest to borrow long-term funds on the date of acquisition.
Patten Corporation acquired an 85% interest in Savage Company for $3,100,000 on January 1, 2019. On this date, the balances in Savage Company?s capital stock and retained earnings accounts were $2,000,000 and $700,000, respectively. An examination of Savage Company?s books on this date revealed the
On January 1, 2019, Pueblo Corporation purchased a 75% interest in Sanchez Company for $900,000. A summary of Sanchez Company?s balance sheet at date of purchase follows: The equipment had an original life of 15 years and remaining useful life of 10 years. During 2019 Pueblo Corporation reported
On January 1, 2019, Perini Company purchased an 85% interest in Silvas Company for $400,000. On this date, Silvas Company had common stock of $90,000 and retained earnings of $210,000. An examination of Silvas Company?s assets and liabilities revealed that their book value was equal to their fair
On January 1, 2019, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company?s stockholders? equity consisted of the following: Common stock............................$500,000Retained earnings.........................190,000 An
On January 1, 2018, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At that time, Salem Company had capital stock of $550,000 and retained earnings of $80,000. Differences between the fair value and the book value of the identifiable assets of Salem
Perke Corporation purchased 80% of the stock of Superstition Company for $1,970,000 on January 1, 2020. On this date, the fair value of the assets and liabilities of Superstition Company was equal to their book value except for the inventory and equipment accounts. The inventory had a fair value of
On January 1, 2019, Paxton Company purchased a 70% interest in Sagon Company for $1,300,000, at which time Sagon Company had retained earnings of $500,000 and capital stock of $1,000,000. On January 1, 2019, the fair value of the assets and liabilities of Sagon Company was equal to their book value
On January 1, 2019, Palmero Company purchased an 80% interest in Santos Company for $2,800,000, at which time Santos Company had retained earnings of $1,000,000 and capital stock of $500,000. On the date of acquisition, the fair value of the assets and liabilities of Santos Company was equal to
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