2. Will rate.

On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $2,021,000. At that time Sharp Company had common stock of $1,498,000 and retained earnings of $702,000. The book values of Sharp Companys assets and liabilities were equal to their fair values except for land and bonds payable. The land had a fair value of $98,000 and a book value of $78,000. The outstanding bonds were issued at par value on January 1, 2008, pay 10% annually, and mature on January 1, 2018. The bond principal is $495,000 and the current yield rate on similar bonds is 8%.

Solve my part b.

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I found a similar question and answer on Chegg but I don't know how to calculate the present value of bond:

(a) Your answer is correct. Prepare a Computation and Allocation Schedule for the difference between book value and the value implied by the purchase price in the consolidated statements workpaper on the acquisition date. (Round present value factor calculations to 5 decimal places, e.g. 1.25136 and final answers to decimal places, e.g. 5,125.) Parent Share 2,021,000 Non- Controlling Share Purchase Price and Implied Value $ 505,250 Less : Book Value of Equity Acquired 1,760,000 i 440,000 Difference between Implied and Book Value 261,000 65.250 Land -16,000 i -4,000 Premium on Bonds Payable 31.620 i 7,905 Balance $ $ $ (a) Your answer is correct. Prepare a Computation and Allocation Schedule for the difference between book value and the value implied by the purchase price in the consolidated statements workpaper on the acquisition date. (Round present value factor calculations to 5 decimal places, e.g. 1.25136 and final answers to decimal places, eg. 5,125.) Parent Share 2,021,000 Non- Controlling Share 505,250 Entire Value 2,526,250 $ $ $ ed 1,760,000 i 440,000 i 2,200,000 i 261,000 65,250 326,250 -16,000 i -4,000 i -20,000 31,620 i 7,905 i 39,525 i 276,620 69,155 345,775 -276,620 i -69,155 -345,775 $ > (b) Your answer is partially correct. Prepare the workpaper entries necessary on December 31, 2013, to allocate and depreciate the difference between book value and the value implied by the purchase price. (Round answers to decimal places, e.g. 5,125. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Land 20000 Goodwill 345775 Interest Expense 5029 Unamortized Premium on Bonds Payable 34496 Difference between Implied and Book Value 326250 Exercise 5-9 On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $1,992,000. At that time Sharp Company had common stock of $1,504,000 and retained earnings of $704,000. The book values of Sharp Company's assets and liabilities were equal to their fair values except for land and bonds payable. The land had a fair value of $100,000 and a book value of $81,000. The outstanding bonds were issued at par value on January 1, 2008, pay 9% annually, and mature on January 1, 2018. The bond principal is $505,000 and the current yield rate on similar bonds is 7%. Parent Share Non- Controlling Share Entire Value Purchase Price and Implied Value 1992000 498000 2490000 $1 $ Less Book Value of Equity Acquired 1766400 441600 2208000 Difference between Implied and Book Value 225600 5400 Land 15200 3800 19000 Premium on Bonds Payable 33131 8283 41414 1 Balance 243531 60883 304414 Goodwill 243531 60883 304414 Balance 0 $1 $ a RAJUDRK answered this 1,459 answers Was this answer helpful? 14 Prepare the following journal entry: Date Account Title and Explanation Debit Credit Dec 31 Land $19,000 2013 Goodwill $304,414 Interest expense ($505,000 x 9%) - ($546,414 x 7%) $7,201 $34,213 Premium on bonds payable - Unamortized ($41,414 - $7,201) Difference between implied and book value $282,000 To record workpaper entries to allocate and depreciate differences Note: Present value of bond: Principal $505,000 0.71299 = $360,060 Interest $45,450 x 4.10020 = $186,354 Total $546,414 Comments Anonymous posted 1 year ago Hello! Could you please show me how you calculated the 41,414 (Premium on Bonds Payable)? Anonymous posted 1 year ago 41,414 anyone? Anonymous posted 12 months ago 546,414-(bond principal $505,000) Leave a comment