The balance sheets of Prima Ltd. and Donna Corp. on December 31, Year 5, are shown...

 

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The balance sheets of Prima Ltd. and Donna Corp. on December 31, Year 5, are shown below: Cash Accounts receivable Inventory Plant Patents Current liabilities Long-term debt Common shares Retained earnings Cash Accounts receivable Inventory Plant Prima $ 374,900 84,900 101,800 517,600 105,800 $1,185,000 Trademarks Patents Current liabilities Long-term debt $ 167,600 269,000 359,600 388,800 $1,185,000 The fair values of the identifiable net assets of Donna Corp. on this date are as follows: $ 11,350 25,600 103,000 211,000 48,000 69,000 Donna $ 11,350 28, 200 71,000 168,800 28, 200 37,800 92,000 $ 307,550 $ 37,800 75,000 109,000 85,750 $ 307,550 In addition to the assets identified above, Donna owned a significant number of Internet domain names, which are unique alphanumeric names used to identify a particular numeric Internet address. These domain names can be sold separately and are estimated to be worth a total of $30,000. On January 1, Year 6, Prima Ltd. paid $306,000 in cash to acquire 80% of the common shares of Donna Corp. Required: (a) Prepare the consolidated balance sheet on January 1, Year 6, under the fair value enterprise method. The balance sheets of Prima Ltd. and Donna Corp. on December 31, Year 5, are shown below: Cash Accounts receivable Inventory Plant Patents Current liabilities Long-term debt Common shares Retained earnings Cash Accounts receivable Inventory Plant Prima $ 374,900 84,900 101,800 517,600 105,800 $1,185,000 Trademarks Patents Current liabilities Long-term debt $ 167,600 269,000 359,600 388,800 $1,185,000 The fair values of the identifiable net assets of Donna Corp. on this date are as follows: $ 11,350 25,600 103,000 211,000 48,000 69,000 Donna $ 11,350 28, 200 71,000 168,800 28, 200 37,800 92,000 $ 307,550 $ 37,800 75,000 109,000 85,750 $ 307,550 In addition to the assets identified above, Donna owned a significant number of Internet domain names, which are unique alphanumeric names used to identify a particular numeric Internet address. These domain names can be sold separately and are estimated to be worth a total of $30,000. On January 1, Year 6, Prima Ltd. paid $306,000 in cash to acquire 80% of the common shares of Donna Corp. Required: (a) Prepare the consolidated balance sheet on January 1, Year 6, under the fair value enterprise method.

Answer rating: 100% (QA)

To analyze the acquisition of Donna Corp by Prima Ltd we need to determine the purchase price alloca... View the full answer