Admiral Casino & Resort paid $47,286,000 in cash for 80 percent of the stock of Gold Road
Question:
Admiral Casino & Resort paid $47,286,000 in cash for 80 percent of the stock of Gold Road Motor Inn, Inc. on January 1, 2016. The book values of Gold Road’s net assets equal their fair values except for the following items:
Gold Road Motor Inn, Inc.
Book Value | Fair Value | |
Plant and Equipment | 277,500,000 | 289,710,000 |
Patents and copyrights | 688,200,000 | 700,410,000 |
In addition, Admiral Casino identified and valued Gold Road's previously unreported intangible asset as follows:
Fair Value | |
Customer Lists | 5,550,000 |
Admiral Casino has determined that the Plant and Equipment has a useful life of 10 years, the Patents and Copyrights have a useful life of 8 years, and the customer list has a useful life of 4 years.
On the date of acquisition, Gold Road reported Common Stock of $2,775,000 and Retained Earnings of $8,325,000. On this date, Admiral estimated the fair value of the 20 percent non‐controlling interest in Gold Road to be $9,324,000.
During the 2017 year, Admiral and Gold Road had several intercompany transactions. As a result of these transactions, Admiral Casino owes Gold Road $470,000.
Required:
1) Prepare a value analysis and a determination and distribution of excess schedule for Admiral Casino’s investment in Gold Road on the date of acquisition. Include if necessary, a goodwill allocation schedule and an amortization schedule.
