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Please explain the answers. On December 31, 20X8, Polaris Corporation acquired 100 percent ownership of Star...

Please explain the answers.

On December 31, 20X8, Polaris Corporation acquired 100 percent ownership of Star Corporation. On that date, Star reported assets and liabilities with book values of $300,000 and $100,000, respectively, common stock outstanding of $50,000, and retained earnings of $150,000. The book values and fair values of Star's assets and liabilities were identical except for land which had increased in value by $10,000 and inventories which had decreased by $5,000.

Based on the preceding information, what amount of goodwill will be reported if the acquisition price was $195,000?

$35,000
$0
$40,000
$15,000

The fair values of all of Sirius's assets and liabilities were equal to their book values except for inventory that had a fair value of $85,000, land that had a fair value of $60,000, and buildings and equipment that had a fair value of $250,000. Buildings and equipment have a remaining useful life of 10 years with zero salvage value. Paradox Company decided to employ push-down accounting for the acquisition. Subsequent to the combination, Sirius continued to operate as a separate company.

Based on the preceding information, what amount will be present in the revaluation capital account, when consolidating entries are prepared?

$65,000
$0
$15,000
$60,000

When a parent owns less than 100% of a subsidiary, the noncontrolling interest shareholders are allocated their ownership percentage of income or net assets in all of the following consolidating entries except for:

The accumulated depreciation consolidation entry
The amortized excess value reclassification entry
The excess value (differential) reclassification entry
The basic investment account consolidation entry
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Homework Answers

Answer #1

1. Option $ 0

Purchase price paid $195,000 against assets acquired worth $205,000, no goodwill is recognized.

Assets 300,000
Less: Liabilities 100,000
200,000
Add: Increase in land 10,000
Less: Decrease in inventory 5000
Net value of assets acquired 205,000

2. Option $65,000

Revaluation a/c = 365,000 - 300,000 = 65,000

Workings:

Total assets 380,000
Less: Current payables 30,000
Notes payable 50,000
Net assets 300,000

3. Option , The accumulated depreciation consolidation entry

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