Plato Inc (Plato) and Saturn Inc (Saturn) had the following balance sheets on October 31, 2024:...

Transcribed Image Text:

Plato Inc (Plato) and Saturn Inc (Saturn) had the following balance sheets on October 31, 2024: Plato Inc Saturn Inc Saturn Inc (carrying value) (carrying value) (fair value) Cash $300,000 $80,000 $80,000 Accounts receivable 60,000 24,000 24,000 Inventory 30,000 54,000 56,000 Plant and equipment (net) 310,000 280,000 300,000 Trademark 12,000 8,000 Total assets $700,000 $450,000 Accounts payable 150,000 $200,000 200,000 Bonds payable 400,000 120,000 100,000 Common shares 100,000 60,000 Retained earnings 50,000 70,000 Total liabilities and equity $700,000 $450,000 Assume Plato purchases 80% of Saturn Inc for cash consideration of $160,000 on November 1, 2024. Plato records its investment using the cost method and prepares its consolidated financial statements using the fair value enterprise (FVE) method. Required: a. Prepare the journal entry that Plato Inc. would make to record the acquisition; b. Prepare the elimination entry necessary to produce consolidated balance sheet on the acquisition date. Please show any calculation of goodwill. c. If Plato purchased 80% of Saturn for $120,000, calculate the goodwill on acquisition. You ARE NOT REQUIRED TO PREPARE JOURNAL ENTRIES. Plato Inc (Plato) and Saturn Inc (Saturn) had the following balance sheets on October 31, 2024: Plato Inc Saturn Inc Saturn Inc (carrying value) (carrying value) (fair value) Cash $300,000 $80,000 $80,000 Accounts receivable 60,000 24,000 24,000 Inventory 30,000 54,000 56,000 Plant and equipment (net) 310,000 280,000 300,000 Trademark 12,000 8,000 Total assets $700,000 $450,000 Accounts payable 150,000 $200,000 200,000 Bonds payable 400,000 120,000 100,000 Common shares 100,000 60,000 Retained earnings 50,000 70,000 Total liabilities and equity $700,000 $450,000 Assume Plato purchases 80% of Saturn Inc for cash consideration of $160,000 on November 1, 2024. Plato records its investment using the cost method and prepares its consolidated financial statements using the fair value enterprise (FVE) method. Required: a. Prepare the journal entry that Plato Inc. would make to record the acquisition; b. Prepare the elimination entry necessary to produce consolidated balance sheet on the acquisition date. Please show any calculation of goodwill. c. If Plato purchased 80% of Saturn for $120,000, calculate the goodwill on acquisition. You ARE NOT REQUIRED TO PREPARE JOURNAL ENTRIES.