Paper purchased 12,000 of Sands 30,000 shares on 10/1/20X0 for $36,000. At 1/1/20X0, Sand had Common Stock
Question:
Paper purchased 12,000 of Sand’s 30,000 shares on 10/1/20X0 for $36,000. At 1/1/20X0, Sand had Common Stock of $30,000 and Retained Earnings of $50,000. During the 12 months ended 12/31/20X0, Sand earned income of $100,000. Annual dividends of $1 per share were authorized by the Board of Directors to be paid in equal amounts at the end of each quarter. The book values and fair values of Sand’s assets and liabilities on 10/1/20X0 were as follows: (Note partial year acquisition)
Assets: | Sand Book Values | Sand Fair Values |
Cash | $20,000 | $20,000 |
Receivables | 30,000 | 30,000 |
Inventory (sold in November 20X0) | 25,000 | 40,000 |
Land | 27,500 | 40,000 |
Building (10 year Life) | 120,000 | 60,000 |
Equipment (5 year Life) | 40,000 | 40,000 |
Patents (5 year life) | 0 | 60,000 |
Total Assets | $262,500 | $290,000 |
Liabilities: | ||
Accounts Payable | $80,000 | $80,000 |
Notes Payable (Matures on 10/1/20X4) | 50,000 | 70,000 |
Required:
- Calculate the Difference (Excess)
- Calculate the goodwill/(bargain purchase gain)
- Prepare the purchase price allocation and amortization schedule, complete it, save it on your computer, and upload your response in the dropbox below)
Purchase Price Allocation and Amortization Schedule | |||||
Account | 10/1/20X0 100% Unamortized Difference | 10/1/20X0 Difference to Assign | BPG Adjustment (if needed) | 20X0 Amortization | 12/31/20X0 Unamortized Difference |
TOTALS |
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones