Question

EXERCISE 5-4 Allocation of Cost and Workpaper Entries at Date of Acquisition LO 2 On January...

EXERCISE 5-4 Allocation of Cost and Workpaper Entries at Date of Acquisition LO 2

On January 1, 2020, Porter Company purchased an 80% interest in Salem Company for $260,000. On this date, Salem Company had common stock of $207,000 and retained earnings of $130,500. An examination of Salem Company’s balance sheet revealed the following comparisons between book and fair values: Book Value Fair Value Inventory $ 30,000 $ 35,000 Other current assets 50,000 55,000 Equipment 300,000 350,000 Land 200,000 200,000 Required: Determine the amounts that should be allocated to Salem Company’s assets on the consolidated financial statements workpaper on January 1, 2020. Prepare the January 1, 2020, consolidated financial statements workpaper entries to eliminate the investment account and to allocate the difference between book value and the value implied by the purchase price.

Homework Answers

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
Exercise 5-4 On January 1, 2015, Porter Company purchased an 80% interest in Salem Company for...
Exercise 5-4 On January 1, 2015, Porter Company purchased an 80% interest in Salem Company for $256,900. On this date, Salem Company had common stock of $210,300 and retained earnings of $128,400. An examination of Salem Company’s balance sheet revealed the following comparisons between book and fair values: Book Value Fair Value Inventory $29,600 $34,800 Other current assets 50,100 55,100 Equipment 303,400 347,200 Land 196,800 196,800 (a) Determine the amounts that should be allocated to Salem Company’s assets on the...
Exercise 5-4 On January 1, 2015, Porter Company purchased an 80% interest in Salem Company for...
Exercise 5-4 On January 1, 2015, Porter Company purchased an 80% interest in Salem Company for $256,900. On this date, Salem Company had common stock of $210,300 and retained earnings of $128,400. An examination of Salem Company’s balance sheet revealed the following comparisons between book and fair values: Book Value Fair Value Inventory $29,600 $34,800 Other current assets 50,100 55,100 Equipment 303,400 347,200 Land 196,800 196,800 (a) Determine the amounts that should be allocated to Salem Company’s assets on the...
EXERCISE 5-1 Allocation of Cost LO 1 LO 3 On January 1, 2018, Pam Company purchased...
EXERCISE 5-1 Allocation of Cost LO 1 LO 3 On January 1, 2018, Pam Company purchased an 85% interest in Shaw Company for $540,000. On this date, Shaw Company had common stock of $400,000 and retained earnings of $140,000. An examination of Shaw Company’s assets and liabilities revealed that their book value was equal to their fair value except for marketable securities and equipment: Book Value Fair Value Marketable securities $ 20,000 $ 45,000 Equipment (net) 120,000 140,000 Required: Prepare...
EXERCISE 5-1 Allocation of Cost LO 1 LO 3 On January 1, 2018, Pam Company purchased...
EXERCISE 5-1 Allocation of Cost LO 1 LO 3 On January 1, 2018, Pam Company purchased an 85% interest in Shaw Company for $540,000. On this date, Shaw Company had common stock of $400,000 and retained earnings of $140,000. An examination of Shaw Company’s assets and liabilities revealed that their book value was equal to their fair value except for marketable securities and equipment: Book Value Fair Value Marketable securities $ 20,000 $ 45,000 Equipment (net) 120,000 140,000 Required: Prepare...
EXERCISE 3‐4 Purchase, Date of Acquisition LO 7 LO 8 LO 9 On January 1, 2018,...
EXERCISE 3‐4 Purchase, Date of Acquisition LO 7 LO 8 LO 9 On January 1, 2018, Peach Company issued 1,500 of its $20 par value common shares with a fair value of $60 per share in exchange for the 2,000 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,700, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Peach Company Swartz Company Cash $ 73,000...
EXERCISE 7‐4 Entries—Intercompany Sale of Land LO 6 Procter Company owns 90% of the outstanding stock...
EXERCISE 7‐4 Entries—Intercompany Sale of Land LO 6 Procter Company owns 90% of the outstanding stock of Silex Company. On January 1, 2019, Silex Company sold land to Procter Company for $350,000. Silex had originally purchased the land on June 30, 2010, for $200,000. Procter Company plans to construct a building on the land bought from Silex in which it will house new production machinery. The estimated useful life of the building and the new machinery is 15 years. Required:...
38) P Company purchased 90% of the common stock of S Company on January 2, 2017...
38) P Company purchased 90% of the common stock of S Company on January 2, 2017 for $900,000. On that date, S Company’s stockholders’ equity was as follows: Common stock, $20 par value $400,000 Other contributed capital 100,000 Retained earnings 450,000 During 2017, S Company earned $200,000 and declared a $100,000 dividend. P Company uses the partial equity method to record its investment in S Company. The difference between implied and book value relates to land. Required: Prepared, in general...
On January 1, 2014, Packard Company purchased an 80% interest in Sage Company for $592,700. On...
On January 1, 2014, Packard Company purchased an 80% interest in Sage Company for $592,700. On this date Sage Company had common stock of $145,700 and retained earnings of $370,900. Sage Company’s equipment on the date of Packard Company’s purchase had a book value of $402,500 and a fair value of $626,775. All equipment had an estimated useful life of 10 years on January 2, 2009. Prepare the December 31 consolidated financial statements workpaper entries for 2014 and 2015 to...
Prepare journal entries to eliminate Porter Company's investment in Sewell Company in the preparation of a...
Prepare journal entries to eliminate Porter Company's investment in Sewell Company in the preparation of a consolidated balance sheet at the date of acquisition for the following case: Sewell Company Equity Balances Cash Percent of Stock Owned Investment Cost Common Stock Other Contributed Capital Retained Earnings 75 $450,000 $145,000 $190,000 $55,000 There is no difference between the book value of net assets acquired and the fair values. Prepare the ELIMINATION journal entries.
Prepare in general journal form the workpaper entries to eliminate Prancer Company's investment in Saltez Company...
Prepare in general journal form the workpaper entries to eliminate Prancer Company's investment in Saltez Company in the preparation of a consolidated balance sheet at the date of acquisition for each of the following independent cases: Saltez Company Equity Balances Cash Percent of Stock Owned Investment Cost Common Stock Other Contributed Capital Retained Earnings a. 100% $351,000 $160,000 $92,000 $43,000 b. 90  232,000  190,000  75,000  (29,000) c. 80  159,000  180,000  40,000   (4,000) Any difference between book value of net assets...