FILL OUT ALL PARTS! $($PART A$-$D$)$

Pushdown Accounting

Assume a parent company acquires its subsidiary by paying $$1,500,000$ for all of the outstanding voting shares of the investee. On the acquisition date, subsidiary's assets and liabilities have individual fair values that equal their book values, except for property equipment with a fair value greater than book value by $$150,000$ and license with a fair value greater than book value by $$250,000.$ The parent and subsidiary have the following balance sheets immediately after the acquisition, but before any pushdown adjustments by the subsidiary:

pusncown Accounting

Assume a parent company acquires its subsidiary by paying $$1,500,000$ for all of the outstanding voting shares of the investee. On the acquisition date, subsidiary's assets and liabilities have individual

fair values that equal their book values, except for property equipment with a fair value greater than book value by $$150,000$ and license with a fair value greater than book value by $$250,000.$ The

parent and subsidiary have the following balance sheets immediately after the acquisition, but before any pushdown adjustments by the subsidiary:

a$.$ Compute the amount of goodwill implicit in the acquisition of the subsidiary.

$

$100000$

b$.$ Assume the subsidiary elects to apply pushdown accounting immediately after the above financial statements were prepared. Provide the journal entries required for the subsidiary to apply

pushdown accounting.

c$.$ Prepare the consolidation entry or entries on the date of acquisition, assuming the subsidiary applied pushdown accounting.

d$.$ Prepare the consolidated balance sheet on the date of acquisition.