On January 1, 2021, Park Place Company acquired 80% of the common stock of Short Line...

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On January 1, 2021, Park Place Company acquired 80% of the common stock of Short Line Company for $456,000. On this date Short Line had total owners' equity of $350,000 (common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000 respectively). Any excess of cost over book value is attributable to 1) inventory (worth $4,000 less than cost, FIFO is used for inventories), 2) equipment (worth $8,000 less than book value, a remaining life of five years) and 3) Building (worth $54,000 more than book value, a remaining life of 15 years) 4) Patent (not on Short Line's balance sheet, worth $20,000, a remaining life of five years) 5) Land (worth $40,000 more than book value) 6) Bonds Payable (fair value $9,000 less than book value, remaining life of 10 years) 7) Any other excess is attributed to Goodwill. Straight-line depreciation is used. Park Place has appropriately accounted for its investment in Short Line using the simple equity method. Required: a. Using the information above prepare a determination and distribution of excess schedule (6 points) On January 1, 2021, Park Place Company acquired 80% of the common stock of Short Line Company for $456,000. On this date Short Line had total owners' equity of $350,000 (common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000 respectively). Any excess of cost over book value is attributable to 1) inventory (worth $4,000 less than cost, FIFO is used for inventories), 2) equipment (worth $8,000 less than book value, a remaining life of five years) and 3) Building (worth $54,000 more than book value, a remaining life of 15 years) 4) Patent (not on Short Line's balance sheet, worth $20,000, a remaining life of five years) 5) Land (worth $40,000 more than book value) 6) Bonds Payable (fair value $9,000 less than book value, remaining life of 10 years) 7) Any other excess is attributed to Goodwill. Straight-line depreciation is used. Park Place has appropriately accounted for its investment in Short Line using the simple equity method. Required: a. Using the information above prepare a determination and distribution of excess schedule (6 points)

Answer rating: 100% (QA)

To prepare the determination and distribution of excess schedule based on the given information we need to identify the excess of cost over book value ... View the full answer