On January 1, 2017, Dirt Company acquired all of Cat Company's voting stock for $16,000 in...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 2017, Dirt Company acquired all of Cat Company's voting stock for $16,000 in cash. Some of Cats identifiable assets at the date of acquisition had fair values that are different from reported values, as follows: Fair Вook Value Value Plant assets, net (20-year remaining life, straight-line) 3000 11,000 Identifiable intangibles that should be capitalized (5-vesar remaining life, straight-line) 10,000 Cat's total shareholders' equity at January 1, 2017, was $4.000. It is now December 31, 2020 (four years later). Cumulative impaiment for the goodwill recognized on this acquisition, to the beginning of 2020, is $2,000. Goodwill impairment for 2020 is $500. Dirt uses the complete equity method to account for its investment in Cat Company on its own books. December 31,2020 trial balances for Dirt and Cat sppear below. Dirt Cat Company Company DR (CR) $ 5,000 34,800 23,600 (22,000) (15,000) (25,000) (25,000) (400) DR (CR) Current assets 2,500 28,000 Plant assets, net Investment in Cat Company Liabilities Capital Stock Retained Earnings, Jan. 1 Sales Revenue Equity in net income of Cat (10,000) (2,000) (16,000) (14,000) Cost of Sales Operating Expenses Total 20,000 4,000 SO 8,000 3,500 $0 Required: You should use cell references in providing a number or preparing a calculations by referencing the data above. Prepare you answer in the solution area provided below. a. Compute goodwill at acquisition. Make sure I can follow how you developed goodwill. b. Prepare the working paper to consolidate Dirt and Cat's trial balances at December 31, 2020. You must designate your elimination entries appropriately C. E. R, O. C- Current - eliminate the current year equity method entries E- Equity - eliminate the subsidiary's beginning-of-current-year equity balances R- Revalue - recognize the beginning-of-current-year fair value revaluations O- Write-Off - recognize current year revaluation write-offs Your working should be set up like Exhibit 4.1 on page 133, which designates the elimination entries. c. Prepare the consolidated income statement for 2020 and the consolidated balance sheet at December 31, 2020 in good form. On January 1, 2017, Dirt Company acquired all of Cat Company's voting stock for $16,000 in cash. Some of Cats identifiable assets at the date of acquisition had fair values that are different from reported values, as follows: Fair Вook Value Value Plant assets, net (20-year remaining life, straight-line) 3000 11,000 Identifiable intangibles that should be capitalized (5-vesar remaining life, straight-line) 10,000 Cat's total shareholders' equity at January 1, 2017, was $4.000. It is now December 31, 2020 (four years later). Cumulative impaiment for the goodwill recognized on this acquisition, to the beginning of 2020, is $2,000. Goodwill impairment for 2020 is $500. Dirt uses the complete equity method to account for its investment in Cat Company on its own books. December 31,2020 trial balances for Dirt and Cat sppear below. Dirt Cat Company Company DR (CR) $ 5,000 34,800 23,600 (22,000) (15,000) (25,000) (25,000) (400) DR (CR) Current assets 2,500 28,000 Plant assets, net Investment in Cat Company Liabilities Capital Stock Retained Earnings, Jan. 1 Sales Revenue Equity in net income of Cat (10,000) (2,000) (16,000) (14,000) Cost of Sales Operating Expenses Total 20,000 4,000 SO 8,000 3,500 $0 Required: You should use cell references in providing a number or preparing a calculations by referencing the data above. Prepare you answer in the solution area provided below. a. Compute goodwill at acquisition. Make sure I can follow how you developed goodwill. b. Prepare the working paper to consolidate Dirt and Cat's trial balances at December 31, 2020. You must designate your elimination entries appropriately C. E. R, O. C- Current - eliminate the current year equity method entries E- Equity - eliminate the subsidiary's beginning-of-current-year equity balances R- Revalue - recognize the beginning-of-current-year fair value revaluations O- Write-Off - recognize current year revaluation write-offs Your working should be set up like Exhibit 4.1 on page 133, which designates the elimination entries. c. Prepare the consolidated income statement for 2020 and the consolidated balance sheet at December 31, 2020 in good form.
Expert Answer:
Answer rating: 100% (QA)
Required solution of all three parts are given below Part A Computation of goodwill at acquisition C... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-1285867977
14th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
Students also viewed these accounting questions
-
It is now December 31, 2012, and a jury just found in favour of a woman who sued the city for injuries sustained in a January 2011 accident. She requested recovery of lost wages, plus $100,000 for...
-
It is now December 31, 2014 (t = 0) , and a jury just found in favor of a woman who sued the city for injuries sustained in a January 2013 accident. She requested recovery of lost wages plus $100,000...
-
It is now December 31, 2011 (t = 0), and a jury just found in favor of a woman who sued the city for injuries sustained in a January 2010 accident. She requested recovery of lost wages plus $100,000...
-
Inferring Investing and Financing Transactions and Preparing a Balance Sheet During its first week of operations ending January 7, 2011, FastTrack Sports Inc. completed six transactions with the...
-
What are the five comparison operators that you can use in Solver?
-
Implement the nearest neighbor algorithm in the programming language of your choice. The algorithm should work with vectors of up to 10 integer values and allow up to 10 integer classifications. By...
-
Beta Supply completed the following selected transactions during the year: Requirements 1. Open T-accounts for Allowance for Uncollectible Accounts and Uncollectible Accounts Expense. These accounts...
-
Prescrip Co. began operations in 2012. The cost and fair values for its long-term investments portfolio in available-for-sale securities are shown below. Prepare Prescrips December 31, 2013,...
-
1.You plan to make an investment. Given the following probability distribution of the returns, what is the expected return on the investment? If the standard deviation of the returns is $77,460, what...
-
As an investment advisor for MREAF (Momentum Real Estate Advisory Fund), you are about to make a presentation to the portfolio manager of the ET&T pension fund. You would like to show what would have...
-
a) Completely factor using Synthetic Division, and find the zeros of the function f(x)=6x4 -11x-51x +99x-27. b) Describe the behaviour of the polynomial to the left and the right of the graph. c)...
-
Janet, age 29, is unmarried and is an active participant in a qualified retirement plan. Her modified AGI is $63,000 in 2015. a. Calculate the amount Janet can contribute to a traditional IRA and the...
-
Discuss the advantages and disadvantages of: (a) Instruction and data caches versus a unified cache for both. (b) Write-back cache versus a write-through cache.
-
sequential circuit with two D lip- lops A and B, two inputs X and Y, and one output Z is speciied by the following input equations: (a) Draw the logic diagram of the circuit. (b) Derive the state...
-
Aqua, Inc., a calendar year corporation, has the following gross receipts and taxable income for 2012 through 2015: Aquas first year of operations was 2012. a. When is Aqua first exempt from the AMT...
-
Collect three to five examples of the most commonly used forums/genres in your culture. Next, review these examples to determine the purpose for which members of your culture use these forums. Once...
-
Subtract and simplify. 5 1 6 6 5 6 6 (Simplify your answer. Type a fraction.)
-
When the concentration of a strong acid is not substantially higher than 1.0 10-7 M, the ionization of water must be taken into account in the calculation of the solution's pH. (a) Derive an...
-
If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?
-
TransWorld Communications Inc., a large telecommunications company, is evaluating the possible acquisition of Georgia Cable Company (GCC), a regional cable company. TransWorld's analysts project the...
-
Bartley Barstools has a market/book ratio equal to 1. Its stock price is $14 per share and it has 5 million shares outstanding. The firm's total capital is $125 million and it finances with only debt...
-
10th percentile = _______
-
70th percentile = _______
-
Calculate the mean. The following data show the lengths of boats moored in a marina. The data are ordered from smallest to largest: 16; 17; 19; 20; 20; 21; 23; 24; 25; 25; 25; 26; 26; 27; 27; 27; 28;...
Study smarter with the SolutionInn App