On January 1, 2020, PAR Inc. purchased 6000 shares (60%) of SUB Co for $300,000 cash....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 2020, PAR Inc. purchased 6000 shares (60%) of SUB Co for $300,000 cash. PAR also is required to pay $60,000 total to SUB's shareholders if future earnings exceed a certain amount. This contingent consideration could be settled by paying an additional $27,000 at acquisition. At the date of the acquisition, SUB's shareholders' equity was $340,000. Carrying values equalled book values of SUB except for equipment with a fair value lower than book value by $12,000 and an unrecorded patent with a fair value of $80,000. Sub's shares were trading at $43 per share around the date of acquisition. Taxes are 30%. Required: Complete the box below with your answers in the highlighted areas. Show and label calculations below. a) Calculate goodwill arising from the acquisition under the fair value enterprise (FVE) method using the following methods to value non-controlling interest: 1) Linear 2) Market value of Sub's shares b) If a goodwill impairment loss of $5,000 for the acquisition goodwill was incurred in 2020, what is the amount of the impairment loss attributable to i) PAR and ii) NCI in 2020 assuming the following FVE method was used to value 1) Linear 2) Market value of Sub's shares (a) Goodwill (total) (b) Impairment loss, impact to: i) PAR ii) NCI FVE: (1) Linear Calculations: (2) Mkt value On January 1, 2020, PAR Inc. purchased 6000 shares (60%) of SUB Co for $300,000 cash. PAR also is required to pay $60,000 total to SUB's shareholders if future earnings exceed a certain amount. This contingent consideration could be settled by paying an additional $27,000 at acquisition. At the date of the acquisition, SUB's shareholders' equity was $340,000. Carrying values equalled book values of SUB except for equipment with a fair value lower than book value by $12,000 and an unrecorded patent with a fair value of $80,000. Sub's shares were trading at $43 per share around the date of acquisition. Taxes are 30%. Required: Complete the box below with your answers in the highlighted areas. Show and label calculations below. a) Calculate goodwill arising from the acquisition under the fair value enterprise (FVE) method using the following methods to value non-controlling interest: 1) Linear 2) Market value of Sub's shares b) If a goodwill impairment loss of $5,000 for the acquisition goodwill was incurred in 2020, what is the amount of the impairment loss attributable to i) PAR and ii) NCI in 2020 assuming the following FVE method was used to value 1) Linear 2) Market value of Sub's shares (a) Goodwill (total) (b) Impairment loss, impact to: i) PAR ii) NCI FVE: (1) Linear Calculations: (2) Mkt value
Expert Answer:
Answer rating: 100% (QA)
Purchase Consideration Contingent Consideration Total Consideration Fair ... View the full answer
Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Answer question 43 again for an option with t = .3 years. How does the time until the option expires affect the value of the call option? Question 43 Use the BlackScholes option pricing formula to...
-
Jerry Stone owns and operates a small beach shop in a mall on Sanibel Island, Florida. For the last six months, Jerry has had a display of sunglasses in the front window. Largely because of the...
-
Write a program that displays a clock and sets the time with the input from three text fields, as shown in Figure 16.38b. Use the ClockPane in Listing 14.21. Resize the clock to the center of the...
-
Explain the meaning and importance of supply chain management (SCM).
-
The following information is the end-of-year data for Pecos Yo Company: Compute the following: 1. Inventory turnover for raw materials inventory 2. Days in raw materials inventory (Assume 360 days in...
-
On January 1, 2024, Jaewoo Industries had outstanding 680,000 common shares ($1 par) that originally sold for $20 per share, and 4,000 shares of 10% cumulative preferred stock ($100 par), convertible...
-
Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2019. She is 45 years old and has been divorced for four years. She receives $1,200 of alimony payments each month from...
-
In Ryan's school, the passing grade is 75 above. The grades of Ryan in Science for the first three grading periods are 75, 80, 72. if his school uses the averaging system to determine if he will pass...
-
Think about the types of employees youd like to hire. What kind of values are you looking for? Remember, this is the point at which you create your companys culture.
-
What skills do you need to develop prior to launch? What skills can you develop during the launch and early stages of your company? Create a plan to develop those skills.
-
Talk to a close mentor and ask what he or she sees as your strengths. Do these match the attributes you identified in question 1?
-
Does your business planning process tie together well? Do you have a compelling, articulate story?
-
Compare your commonsized financials to those of your benchmark company. Can you validate or explain differences between you and the benchmark company?
-
Pannell Resources has a defined benefit pension plan for its 280 employees. In 2016 they decided to modify the pension plan, resulting in an increase of $3,840,000 to the projected benefit...
-
Assessing simultaneous changes in CVP relationships Braun Corporation sells hammocks; variable costs are $75 each, and the hammocks are sold for $125 each. Braun incurs $240,000 of fixed operating...
-
Sorenstam Advertising AG was founded in January 2015. The following are the adjusted and unadjusted trial balances as of December 31, 2019. Instructions a. Journalize the annual adjusting entries...
-
On January 1, 2017, a machine was purchased for $90,000. The machine has an estimated residual value of $6,000 and an estimated useful life of 5 years. The machine can operate for 100,000 hours...
-
On January 1, 2019, Norma Smith and Grant Wood formed a computer sales and service company in Manchester, U.K., by investing 90,000 cash. The new company, Lakeland Sales and Service, has the...
-
Cavett Problem. A process having multiple recycle loops formulated by R.H. Cavett [Proc. Am. Petrol. Inst., 43, 57 (1963)] has been used extensively to test tearing, sequencing, and convergence...
-
Consider the ammonia process in which \(\mathrm{N}_{2}\) and \(\mathrm{H}_{2}\) (with impurities \(\mathrm{Ar}\) and \(\mathrm{CH}_{4}\) ) are converted to \(\mathrm{NH}_{3}\) at high pressure...
-
Use a process simulator to model a two-stage compression system with an intercooler. The feed stream consists of \(95 \mathrm{~mol} \%\) hydrogen and \(5 \mathrm{~mol} \%\) methane at \(100^{\circ}...
Study smarter with the SolutionInn App