Question

Problem1: On January 1, 2009, Vacker Co. acquired 70% of Carper Inc. by paying $650,000. This included a $20,000 control premium. Carper reported common stock on that date of $420,000 with retained earnings of $252,000. A building was undervalued in the company's financial records by $28,000. This building had a ten-year remaining life. Copyrights of $80,000 were to be recognized and amortized over 20 years.
Carper earned income and paid cash dividends as follows:

	NI	Div Paid
2009	$105,000	$54,600
2010	$134,400	$61,600
2011	$154,000	$84,000

On December 31, 2011, Vacker owed $30,800 to Carper. There have been no changes in Carper's common stock account since the acquisition.

1. Show the acquisition date FV allocation, which includes detailed steps such as allocation to BV, FV over BV, and Goodwill allocation, between controlling and noncontrolling interests.

2. Calculate the following amounts for individual accounts:

the balance of investment in Carper on Vacker’s book on Dec 31^st 2010;

noncontrolling interest on consolidated financial statement on Dec 31^st, 2010);

and the balance of noncontrolling interest on Dec 31^st 2011.

3. List all necessary consolidation entries as of December 31, 2011?

Answer 1

1. Show the acquisition date FV allocation, which includes detailed steps such as allocation to BV, FV over BV, and Goodwill allocation, between controlling and noncontrolling interests.
From the acquisition value, $28,000 was allocated based on the fair value of the building and will be amortized Within a ten-year remaining life; while Copyrights of $80,000 were to be recognized and amortized over 20 years.
	Hence Amortization		controlling interest (70%)	Non-controlling interest (30%)
	A	B	C =B X 70%	D= B X 30%
	Building	= $28,000 /10 years
		$                   2,800	$                  1,960	$                       840
	Copy Right	=$80,000 / 20 years
		$                   4,000	$                  2,800	$                   1,200
GoodWill
	Fair Value of the net asset acquired
	common stock	$              420,000
	retained earnings	$              252,000
	building	$                 28,000
	Copyrights	$                 80,000
	(A)	$              780,000
	Less		* Vacker paid $650,000 which includes $20,000 premium
	Non controlling interest * (9000000* 30%)	$              270,000	Amt without premium	= 650000-20000
	controlling interest	$              650,000	$               630,000
	(B)	$              920,000	Value of company	= 630000/70%
	Goodwill (A-B)	$              140,000	$               900,000
	Goodwill attributable to Vacker - 70%	= $650,000 – [70% × $780,000]
	$104,000
	Goodwill attributable to non controlling interest - 30%	= $270,000 – [30% × $780,000]
	$36,000
2. Calculate the following amounts for individual accounts: noncontrolling interest on consolidated financial statement on Dec 31st, 2010); and the balance of noncontrolling interest on Dec 31st 2011.
noncontrolling interest on consolidated financial statement on Dec 31st, 2010
	Common Stock-Carper Inc.	420,000
	Retained Earnings (252,000+105000-54600+134400-61600)	375,200
	(A)	795,200
	(B)	30%
	C=(A) X (B)	238,560
balance of noncontrolling interest on Dec 31st 2011.
	as on 01-01-2009	270,000
	Income   (105000-2800-4000)*30%	29,460
	Div (54600*30%)	-16,380
	Income   (134400-2800-4000)*30%	38,280
	Div (61600*30%)	-18,480
	as on 01-01-2011	302,880
	Dividends (84000*30%)	-25,200
	Income of Carper (154000-2800-4000) *30%	44,160
	balance of noncontrolling interest on Dec 31st 2011.	321,840

3. List all necessary consolidation entries as of December 31, 2011
		Dr	Cr
	Entry S
	Common Stock-Carper Inc.	420,000
	Retained Earnings, 1/1/11- Carper Inc. (252,000+105000-54600+134400-61600)	375,200
	Investment in Carper Inc. (70%)		556,640
	Noncontrolling Interest in Carper Inc., 1/1/11   ((420000+375200) x 30%)		238,560
	Entry A
	Building (28,000 less 2 yrs. Deprn.)	22,400
	Copyright (80,000 less 2 yrs. Amort.)	72,000
	Goodwill	140,000
	Investment in Carper Inc. (22400+72000)*70% + 104000		170,080
	Noncontrolling Interest (22400+72000)*30% + 36000		64,320
	Entry I
	Equity in Subsidiary Earnings	103,040
	Investment in Carper Inc.		103,040
	(The 70% of sub’s income less controlling interest share of amortization and depreciation(70%*154,000)-[(2800*70%)]-[(4000*70%)=$103,400.00)
	Entry D
	Investment in Carper Inc.	58,800
	Dividends Paid (84000*70%)		58,800
	Entry E
	Depreciation Expense	2,800
	Amortization Expense	4,000
0 0 Add a comment Know the answer? Your Answer: Post as a guest Your Name: What's your source? Earn Coins Coins can be redeemed for fabulous gifts. Log In Sign Up Post as anonymous Post Your Answer Not the answer you're looking for? Ask your own homework help question Similar Questions On January 1, 2018, Vacker Co. acquired 70% of Carper Inc. by paying $630,000. Carper reported... On January 1, 2018, Vacker Co. acquired 70% of Carper Inc. by paying $630,000. Carper reported common stock on that date of $420,000 with retained earnings of $250,000. Book value equaled fair value for all items on Carper’s balance sheet except for the following: Book Value: Land - $40,000 Building (10 yr. remaining life) - $120,000 Copyrights (20 yr. remaining life) - $10,000 Fair Value: Land - $60,000 Building (10 yr. remaining life) - $150,000 Copyrights (20 yr. remaining life)... Assume that on January 1, 2009, a parent company acquired a 90% interest in a subsidiary's... Assume that on January 1, 2009, a parent company acquired a 90% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values. On January 1, 2011, the subsidiary purchased a building for $486,000. The building has a useful life of 10 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2013, the subsidiary sold the building to the parent... Consolidation Problem On January 1 2020, Starbucks acquired 100% of Dunkin’s outstanding common stock for $1,000,000... Consolidation Problem On January 1 2020, Starbucks acquired 100% of Dunkin’s outstanding common stock for $1,000,000 in cash. As of January 1 2020, the following fair values where determined. Dunkin’s Buildings had a FV in excess of BV of $150,000 Dunkin’s Equipment had a FV in excess of BV of $40,000 Dunkin had an unrecorded patent with a FMV of $10,000 For all other Dunkin Accounts as of Jan 1, 2020, all other GAAP book values equaled fair values. Here... Goodwill, Equity Method, Eliminating Entries, First Year On January 1, 2020, Playtel Inc. acquired 75 percent... Goodwill, Equity Method, Eliminating Entries, First Year On January 1, 2020, Playtel Inc. acquired 75 percent of the stock of San Jose Cable for $200 million in cash. At the date of acquisition, the fair value of the noncontrolling interest was $50 million, and Playtel’s shareholders’ equity accounts were as follows (in thousands): Common stock, $1 par $5,000 Additional paid-in capital 25,000 Retained deficit (1,000) Treasury stock (800) Total $28,200 Both companies have a December 31 year-end. At the date... On January 1, 2013, Starbucks acquired 100% of Dunkin. On this date: Starbucks acquired 100% of... On January 1, 2013, Starbucks acquired 100% of Dunkin. On this date: Starbucks acquired 100% of Dunkin’s outstanding common stock for $842,000 in cash. Dunkin’s Buildings had a FV in excess of BV of $72,000 and remaining Useful Life was 12 years. Dunkin’s Equipment had a FV in excess of BV of $10,000 and remaining Useful Life was 10 years. Dunkin had an unrecorded Patent with a FMV $20,000 and remaining Useful Life was 20 years. Dunkin’s Stockholder’s Equity total... 1)Presents Inc. acquired all of the outstanding common stock of Santa Co. on January 1, 2017,... 1)Presents Inc. acquired all of the outstanding common stock of Santa Co. on January 1, 2017, for $257,000. Annual amortization of $19,000 resulted from this acquisition. Presents reported net income of $70,000 in 2017 and $50,000 in 2018 and paid $22,000 in dividends each year. Santa reported net income of $40,000 in 2017 and $47,000 in 2018 and paid $10,000 in dividends each year. On the consolidated financial statements for 2017, a)what amount should have been shown for Equity in... Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $289,800 in... Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $289,800 in cash. Jasmine had a book value of only $207,400 on that date. However, equipment (having an eight-year remaining life) was undervalued by $74,400 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $13,900. Subsequent to the acquisition, Jasmine reported the following: Net Income Dividends Declared 2016 $ 62,400 $ 10,000 2017 76,500 40,000 2018 30,200 20,000 In accounting for... On January 1, 2017, Mona, Inc., acquired 90 percent of Lisa Company’s common stock as well... On January 1, 2017, Mona, Inc., acquired 90 percent of Lisa Company’s common stock as well as 70 percent of its preferred shares. Mona paid $66,000 in cash for the preferred stock, with a call value of 110 percent of the $50 per share par value. The remaining 30 percent of the preferred shares traded at a $35,000 fair value. Mona paid $558,000 for the common stock. At the acquisition date, the noncontrolling interest in the common stock had a... ADVERTISEMENT Need Online Homework Help? Get Answers For Free Most questions answered within 1 hours. Ask a Question ADVERTISEMENT Active Questions 1.     The general equation of a conic section is given by -4x^2 + 25y^2 -50y +125... asked 7 minutes ago Given the function y = e-0.4(x-3)^2. Compute the corresponding values of yh. Use the bar(xh,yh,.3) command... asked 20 minutes ago Suppose you have a balanced one-way completely randomized experiment, with a=3a=3 and n=4n=4. Furthermore, assume that... asked 20 minutes ago Summarize the emergence and current status of FARC and the ELN asked 58 minutes ago Write a Java application with a JavaFX GUI that takes a String input by the user... asked 1 hour ago Glucose, C6H12O6, is used as an energy source by the human body. The overall reaction in... asked 1 hour ago QUESTION 43 Erik Erikson is credited with developing the psychosexual stages of development. True False 1... asked 1 hour ago The rate constants for the reactions of atomic chlorine and of hydroxyl radical with ozone are... asked 1 hour ago WRITE A JAVA PROGRAM: The last digit of a credit card number is the check digit,... asked 1 hour ago It can be argued that it is not worth designing protection against a 100 year hurricane... asked 1 hour ago Software to detect fraud in consumer phone cards tracks the number of metropolitan areas where calls... asked 2 hours ago Write a Java application a String input by the user and shows whether the string contains... asked 2 hours ago About Contact Terms of Use Privacy Policy Academic Honesty Policy Homework Answer Scanner App Report DMCA © 2022 JustAAA   user contributions licensed under cc by-sa 4.0