Question
1) Plant Inc. a calendar year reporting company acquired 80% of Seed Inc.s outstanding common stock for $ 484,000 on Dec. 31, 2018, when the
1) Plant Inc. a calendar year reporting company acquired 80% of Seed Inc.s outstanding common stock for $ 484,000 on Dec. 31, 2018, when the fair value of Seeds Net Assets was $ 568,000. The following data summarize the fair value calculation: (2 Marks)
Book Value Element | Amount $ | Life Remaining |
Common Stock | 150,000 |
|
Retained Earnings | 135,000 |
|
|
|
|
Under Or-Over Valuation |
|
|
Inventory | (9700) | 2 Months |
Land | 48,000 | Indefinite |
Equipment | 96,000 | 8 Years |
Covenant Not-To Compete | 40,000 | 5 Years |
Goodwill Element | 108,700 | Indefinite |
Total Cost | 568,000 |
|
Plant Inc. & Seed Inc.
Worksheet
As at Dec. 31, 2018
Balance Sheet | Plant ($) | Seed ($) |
Cash | 148,000 | 47,000 |
Account Receivable | 103,500 | 118,000 |
Inventory | 152,500 | 126,000 |
Investment in Seed - |
|
|
Book Value | 228,000 |
|
Excess Cost | 226,400 |
|
Land | 168,000 | 127,000 |
Building & Equipment | 400,000 | 309,000 |
Accumulated Depreciation | -16,000 | -102,000 |
Total Assets | 1,410,400 | 625,000 |
|
|
|
Payable & Accruals | 265,400 | 120,000 |
Long Term Assets | 290,000 | 220,000 |
Common Stock | 450,000 | 150,000 |
Retained Earnings | 405,000 | 135,000 |
Total Liabilities & Equity | 1,410,400 | 625,000 |
You are required to
(a) Prepare an Analysis of the Investment Account Through Dec. 31, 2018. Show clearly Book Value and Excess Value calculation by preparing tables.
(b) Prepare all consolidation (Elimination Entries) as of Dec. 31, 2018.
(c) Prepare a Consolidated Worksheet as at Dec. 31, 2018.
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