Pound Company acquired all of the common stock of Sterling Company on January 1, 2023. As...
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Pound Company acquired all of the common stock of Sterling Company on January 1, 2023. As of that date, Sterling had the following trial balance: Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (20-year life) Cash and short-term investments Common stock Debit Credit $ 60,000 $ 50,000 60,000 140,000 70,000 300,000 Equipment (net) (8-year life) 240,000 Intangible assets (indefinite life) Land 110,000 90,000 Long-term liabilities (mature 12/31/25) Retained earnings, 1/1/23 Supplies Totals 180,000 120,000 20,000 $ 720,000 $ 720,000 During 2023, Sterling reported net Income of $96,000 while paying dividends of $12,000. Pound acquired the common stock of Sterling for $588,000 in cash. As of January 1, 2023, Sterling's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to a patent, to be amortized over 10 years. Pound decided to use the equity method for this Investment. Required: A. Prepare a schedule to allocate the fair value of Sterling Co. at January 1, 2023, and to determine the amount of any resulting amortization. B. Prepare consolidation worksheet entries for December 31, 2023. Pound Company acquired all of the common stock of Sterling Company on January 1, 2023. As of that date, Sterling had the following trial balance: Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (20-year life) Cash and short-term investments Common stock Debit Credit $ 60,000 $ 50,000 60,000 140,000 70,000 300,000 Equipment (net) (8-year life) 240,000 Intangible assets (indefinite life) Land 110,000 90,000 Long-term liabilities (mature 12/31/25) Retained earnings, 1/1/23 Supplies Totals 180,000 120,000 20,000 $ 720,000 $ 720,000 During 2023, Sterling reported net Income of $96,000 while paying dividends of $12,000. Pound acquired the common stock of Sterling for $588,000 in cash. As of January 1, 2023, Sterling's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to a patent, to be amortized over 10 years. Pound decided to use the equity method for this Investment. Required: A. Prepare a schedule to allocate the fair value of Sterling Co. at January 1, 2023, and to determine the amount of any resulting amortization. B. Prepare consolidation worksheet entries for December 31, 2023.
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Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
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