rn Parent Company acquired 100 percent of Subsidiary's outstanding stock for $6,162,500 cash on January 1, 2019.
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Parent Company acquired 100 percent of Subsidiary's outstanding stock for $6,162,500 cash on January 1, 2019. At the date of acquisition, Subsidiary's balance sheet was as follows: Cash 157,250 Receivables 348,500 Inventory Land 633,250 382,500 Equipment (net) Software 956,250 1,338,750 Liabilities (1,793,500) (1,487,500) (535,500) Common Stock Retained Earnings Certain assets and liabilities had fair values that differed from their book values. The fair values of these were as follows (note: this is not the difference between fair value and book value; this is the fair value): Land 340,000 Brand Name (indefinite life) Software (2 year life) IP R&D (10 year life) 255,000 1,763,750 1,275,000 Other relevant information: • Parent's 1/1/2020 retained earnings balance (excluding the effect of any 2019 subsidiary transactions/income) was $3,952,500. • The subsidiary had net income of $318,750 and paid no dividends in 2019. • There are no intercompany payables/receivables between Parent and Subsidiary. • The companies' 12/31/2020 trial balances are as follows: Parent Company acquired 100 percent of Subsidiary's outstanding stock for $6,162,500 cash on January 1, 2019. At the date of acquisition, Subsidiary's balance sheet was as follows: Cash 157,250 Receivables 348,500 Inventory Land 633,250 382,500 Equipment (net) Software 956,250 1,338,750 Liabilities (1,793,500) (1,487,500) (535,500) Common Stock Retained Earnings Certain assets and liabilities had fair values that differed from their book values. The fair values of these were as follows (note: this is not the difference between fair value and book value; this is the fair value): Land 340,000 Brand Name (indefinite life) Software (2 year life) IP R&D (10 year life) 255,000 1,763,750 1,275,000 Other relevant information: • Parent's 1/1/2020 retained earnings balance (excluding the effect of any 2019 subsidiary transactions/income) was $3,952,500. • The subsidiary had net income of $318,750 and paid no dividends in 2019. • There are no intercompany payables/receivables between Parent and Subsidiary. • The companies' 12/31/2020 trial balances are as follows:
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Net asset book value Common stock 1487500 Retained earnings 535500 Net asset at book value 2023000 Fair value in excess of book value Amortisation 2019 2020 Land 42500 Brand name 255000 Software 42500... View the full answer
Related Book For
Fundamentals of Advanced Accounting
ISBN: 978-1259722639
7th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
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