Question
1. On January 1, 2020. Pilsner Company acquired a 70% interest in Smalley Company for $3,500,000. On that date, Smalley Company had common stock of
1. On January 1, 2020. Pilsner Company acquired a 70% interest in Smalley Company for $3,500,000. On that date, Smalley Company had common stock of $900,000 and retained earnings of $1,700,000. The book values of assets and liabilities were equal to fair values except for the following:
Book Value | Fair Value | |
Inventory | $55,000 | $68,000 |
Supplies | $8,000 | $5,500 |
Salaries payable | $7,500 | $9,700 |
Equipment | $130,000 | $290,000 |
Land | $600,000 | $760,000 |
The inventory was sold in 2020. The equipment had an estimated remaining useful life of 8 years. Pilsner Company uses the cost method to record its investment in Smalley Company
Required:
Prepare all the workpaper entry to allocate, amortize, and depreciate the difference between implied and book value on:
A) 1/1 2020,
B) 12/31/2020
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started