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The MAMMA SpA owns 100 percent of the shares issued by BAMBINA Srl. The investment is recorded on the...

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The MAMMA SpA owns 100 percent of the shares issued by BAMBINA Srl. The investment is recorded on the parent company's balance sheet at a value of $120,000. The following summary data at acquisition date is known of the two companies. Assets Liabilities MAMMA S.p.A Carrying Amount $ 500,000 $430,000 Fair Value $760,000 $ 500,000 BAMBINA S.r.l. Carrying Amount $ 240,000 $ 100,000 Fair Value $300,000 $ 210,000 The differences between fair value and book value shown here are all attributable to assets and liabilities already recorded in the accounts of the two companies. There are, therefore, no new assets or liabilities that are recognized as a result of consolidation operations, with the exception of any goodwill. On the basis of this information, determine the structure of the synthetic balance sheet of the group at acquisition date, highlighting the value of the assets, liabilities and net equity. In addition, provide, again in summary form, the consolidation entries that must be made to produce that result. Please note: consolidation journal entries are required. I suggest dividing them into two parts (as done in the video): the first part in which the differences between fair value and book value are recognized and the second part in which the consolidation process is completed.

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Step 1 Recognize the fair value and book value of assets and liabilities Recognize the fair value of assets and liabilities Recognize the fair value o View the full answer


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Fundamentals of Advanced Accounting

Fundamentals of Advanced Accounting

ISBN: 978-0077862237

6th edition

Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik

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Posted Date: February 21, 2022 07:03:58
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