Question

McGuire Company acquired 90 percent of Hogan Company on January 1, 20X1, for $243,000 cash. This...

McGuire Company acquired 90 percent of Hogan Company on January 1, 20X1, for $243,000 cash. This amount is reflective of Hogan's total fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Book Value Fair Value Buildings, 10-year life $10,000 $9,000 Equipment, 4-year life 14,000 18,000 Land 5,000 12,000 Any excess consideration transferred over fair value is attributable to an unrecorded patent with a useful life of 5 years. At what amount will the Patent be reported in the December 31, 20X1, balance sheet?

Homework Answers

Answer #1
The patent is excess consideration transferred over fair value
Purchase consideration $243,000
Net assets Book Value Fair Value Increase (Decrease)
Buildings 10000 9000 -1000
Equipment 14000 18000 4000
Land 5000 12000 7000
29000 39000 10000
Therefore, the net assets of the company would increase by 10,000
The current value of net assets (160,000+80,000) $240,000
Increase in fair value $10,000
Value of net assets $250,000
% acquired 90%
Value of net assets acquired $225,000
Purchase consideration $243,000
Patent $18,000
The patent to be reported in the December 31, 20X1 balance sheet would be $18,000
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash....
1. McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Book Value Fair Value Buildings (10-year life) $ 10,000 $ 8,000 Equipment (4-year life) 14,000 18,000 Land 5,000 12,000 Any excess consideration transferred over fair value is attributable to an unamortized...
McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This...
McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Book Value Fair Value Buildings (10-year life) $ 10,000 $ 8,000 Equipment (4-year life) 14,000 18,000 Land 5,000 12,000 Any excess consideration transferred over fair value is attributable to an unamortized patent...
McGuire Company acquired 90 percent of Hogan Company on January 1, 2014, for $234,000 cash. This...
McGuire Company acquired 90 percent of Hogan Company on January 1, 2014, for $234,000 cash. This amount is reflective of Hogan's total fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Building: Book Value=$10,000 Fair Value=$8,000 Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years. In consolidation at January 1, 2014, what adjustment...
McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This...
McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Book Value Fair Value Buildings (10-year life) $ 10,000 $ 8,000 Equipment (4-year life) 14,000 18,000 Land 5,000 12,000 Any excess consideration transferred over fair value is attributable to an unamortized patent...
4. McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash....
4. McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Book Value Fair Value Buildings (10-year life) $ 10,000 $ 8,000 Equipment (4-year life) 14,000 18,000 Land 5,000 12,000 Any excess consideration transferred over fair value is attributable to an unamortized...
McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This...
McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Book Value Fair Value Buildings (10-year life) $ 10,000 $ 8,000 Equipment (4-year life) 14,000 18,000 Land 5,000 12,000 Any excess consideration transferred over fair value is attributable to an unamortized patent...
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed,...
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $972,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,020,000 and Retained Earnings of $51,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $108,000. QuickPort attributed the $9,000 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following:...
Star & Anderson SAOG. acquired all of the common stock of Wilkinson SAOG. on January 1,...
Star & Anderson SAOG. acquired all of the common stock of Wilkinson SAOG. on January 1, 2018.  As of that date, Wilkinson had the following trial balance: Particulars Debit Credit Sundry Creditors 30,000 Land & Buildings (10 year  life) 70,000 Additional Paid-in –Capital 30,000 Sundry Debtors 25,000 Cash and bank balances 18,000 Short Term Investments 17,000 Equity share capital 150,000 Inventory 55,000 Plant and Equipment (4 year life) 120,000 Land 45,000 Long term borrowings ( Maturity 31/12/2020 90,000 Retained earnings (Opening Balance)...
17. kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for...
17. kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for U.S. $350,000 on January 1, 2021, when the exchange rate for the Canadian dollar (CAD) was U.S. $0.70. The fair value of the net assets of Hastie was equal to their book value of CAD 450,000 on the date of acquisition. Any acquisition consideration excess over fair value was attributed to an unrecorded patent with a remaining life of five years. The functional currency...
On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange...
On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $788,900 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $338,100 both before and after Truman’s acquisition. In reviewing its acquisition, Truman assigned a $129,500 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT