Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January 1, 2023,...
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Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January 1, 2023, in exchange for $5,977,500 in cash. Allison Intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year ends. At the acquisition date, Mathlas's stockholders' equity was $2,025,000 including retained earnings of $1,525,000. At the acquisition date, Allison prepared the following fair value allocation schedule for its newly acquired subsidiary: Consideration transferred Mathias stockholders' equity Excess fair over book value 5 5.977,500 2,025,000 $ 3,952,500 to unpatented technology (8-yone remaining life) $840,000 to patents (10-year remaining life) to increase long-term debt (undervalued, 5-year remaining life) 2,550,000 (125,0001 Goodvill 3,265,000 Postacquisition, Allison employs the equity method to account for its investment in Mathlas. During the two years following the business combination, Mathias reports the following income and dividends: Incone 2023 2024 5 470,625 941,250 Dividends 5 25,000 50,000 No asset Impairments have occurred since the acquisition date. Individual financial statements for each company as of December 31, 2024, follow. Parentheses indicato credit balances. Dividends declared were paid in the same period. Income Statement Sales Cant of goods sold Depreciation expense Amortization expense Intereat expense Equity earnings in Kathian Statement of Retained Earnings Retained earnings, Het income (above) Dividenda declared 1/1 Retained earnings, 12/31 Dalence Sheet Inventory Investrant in Kathian Equipment (net) Patents Unpatented technology Accounts payable Retained warningay 12/31 (5.925,000 4,370,000 3,7561000 442,500 Required: a. Determine the annual excess fair over book value amortization. b. Prepare a worksheet to determine the consolidated values to be reported on Allison's financial statements. Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January 1, 2023, in exchange for $5,977,500 in cash. Allison Intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year ends. At the acquisition date, Mathlas's stockholders' equity was $2,025,000 including retained earnings of $1,525,000. At the acquisition date, Allison prepared the following fair value allocation schedule for its newly acquired subsidiary: Consideration transferred Mathias stockholders' equity Excess fair over book value 5 5.977,500 2,025,000 $ 3,952,500 to unpatented technology (8-yone remaining life) $840,000 to patents (10-year remaining life) to increase long-term debt (undervalued, 5-year remaining life) 2,550,000 (125,0001 Goodvill 3,265,000 Postacquisition, Allison employs the equity method to account for its investment in Mathlas. During the two years following the business combination, Mathias reports the following income and dividends: Incone 2023 2024 5 470,625 941,250 Dividends 5 25,000 50,000 No asset Impairments have occurred since the acquisition date. Individual financial statements for each company as of December 31, 2024, follow. Parentheses indicato credit balances. Dividends declared were paid in the same period. Income Statement Sales Cant of goods sold Depreciation expense Amortization expense Intereat expense Equity earnings in Kathian Statement of Retained Earnings Retained earnings, Het income (above) Dividenda declared 1/1 Retained earnings, 12/31 Dalence Sheet Inventory Investrant in Kathian Equipment (net) Patents Unpatented technology Accounts payable Retained warningay 12/31 (5.925,000 4,370,000 3,7561000 442,500 Required: a. Determine the annual excess fair over book value amortization. b. Prepare a worksheet to determine the consolidated values to be reported on Allison's financial statements.
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a To determine the annual excess fair over book value amortization we need to calculate the amortiza... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni
Posted Date:
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