On January 1,2011, Praxis Corp. purchased 75.00% of the net assets of Sanchez Corp. for $178,945. The fair value of Sanchez Corp. on January 1, 2011 is estimated to be $238,594. The write-up of the Buildings and Equipment from book value to fair market value amounted to 55.00% of the total differential. The write-up of the Land from book value to fair market value amounted to 10.00% of the total differential. The remaining 35.00% of the total differential is attributable to Goodwill The remaining useful life of the Buildings and Equipment is assumed to be 10 years Goodwill is impaired at the end of 2011 and 2012 and must be written down, each year. by 15.00 % of its original (initial) value. The company uses the equity method approach to account for the goodwill impairment A complete set of financial statements for fiscal years 2011 and 2012 for Praxis Corp is located Below. A complete set of financial statements for fiscal years 2011 and 2012 for Sanchez Corp. is located below

1) Based on the purchase price, calculate the purchased differential (in dollars), as well as the purchased differential (in dollars) applied to:

i) Buildings and Equipment,

ii) Land and

iii) Goodwill. (SHOW ALL WORK IN THE CALCULATION).

2) Based on the fair value, calculate the total differential (in dollars), as well as the total differential (in dollars) applied to:

i) Buildings and Equipment,

ii) Land and

iii) Goodwill.

3) For fiscal year 2011. Provide ALL journal entries (and t-accounts) used by the parent company to account for its investment in the subsidiary using the equity method.

4) For fiscal year 2011 provide ALL eliminating entries (and t-accounts) necessary to create consolidated financial statements.

5) For fiscal year 2011, create the consolidated financial statements using the 3-step worksheet

6) For fiscal year 2012, provide ALL journal entries (and t-accounts) used by the parent company to account for its investment in the subsidiary using the equity method.

7) For fiscal year 2012 provide ALL eliminating entries (and t-accounts) necessary to create consolidated financial statements.

8) For fiscal year 2012, create the consolidated financial statements using the 3-step worksheet. Attached Financials

Answer rating: 100% (QA)

Part 1 Purchased differential in dollars 179215178945 270 Building and equipment 55 27055 1485 Lan... View the full answer