5-3 and 5-4

Chapter 5 Allocation and Depreciation of Differences Between Implied and ERCISE 5-3 S52500. ained ca Allocation of Cost LO 2 Pace Company purchased 20,000 of the 25,000 shares of Saddler Corporation for $525 January 3, 2019, the acquisition date, Saddler Corporation's capital stock and retained account balances were $500,000 and $100,000, respectively. The following values were determined for Saddler Corporation on the date of purcha Inventory Other current assets Marketable securities Plant and equipment Book Value $ 50,000 200,000 100,000 300,000 Fair Value $ 70,000 200,000 125,000 330,000 Required: A. Prepare the entry on the books of Pace Company to record its investment in Saddle Corporation. B. 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. CISE 5-4 Allocation of Cost and Workpaper Entries at Date of Acquisition LO 2 On January 1, 2020, Porter Company purchased an 80% interest in Salem Company for $260,000 On this date, Salem Company had common stock of $207,000 and retained earnings of $130,500 An examination of Salem Company's balance sheet revealed the following comparisons bet- ween book and fair values: Inventory Other current assets Equipment Land Book Value $ 30,000 50,000 300,000 200,000 Fair Value $ 35,000 55,000 350,000 200,000 Required: A. Determine the amounts that should be allocated to Salem Company's assets on the consolidated financial statements workpaper on January 1, 2020. R. Prenare the January 1, 2020, consolidated financial statements workpaper entries to elimi nate the investment account and to allocate the difference between book value and the valu implied by the purchase price. SE 5-5 T-Account Calculation of Controlling and Noncontrolling Interest in interest in Consolidated Ne Income LO 4 On January 1, 2019, P Company purchased an 80% interest in s Company many purchased an 80% interest in s Company for $600,000, at whic time S Company had retained earnings of $300,000 and capital stock of $350.000 between book value and the value implied by the purchase price was entirely att plied by the purchase price was entirely attributable to a pate with a remaining useful life of 10 years. Assume that P and Companies neported net income from al Chapter 5 Allocation and Depreciation of Differences Between Implied and ERCISE 5-3 S52500. ained ca Allocation of Cost LO 2 Pace Company purchased 20,000 of the 25,000 shares of Saddler Corporation for $525 January 3, 2019, the acquisition date, Saddler Corporation's capital stock and retained account balances were $500,000 and $100,000, respectively. The following values were determined for Saddler Corporation on the date of purcha Inventory Other current assets Marketable securities Plant and equipment Book Value $ 50,000 200,000 100,000 300,000 Fair Value $ 70,000 200,000 125,000 330,000 Required: A. Prepare the entry on the books of Pace Company to record its investment in Saddle Corporation. B. 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. CISE 5-4 Allocation of Cost and Workpaper Entries at Date of Acquisition LO 2 On January 1, 2020, Porter Company purchased an 80% interest in Salem Company for $260,000 On this date, Salem Company had common stock of $207,000 and retained earnings of $130,500 An examination of Salem Company's balance sheet revealed the following comparisons bet- ween book and fair values: Inventory Other current assets Equipment Land Book Value $ 30,000 50,000 300,000 200,000 Fair Value $ 35,000 55,000 350,000 200,000 Required: A. Determine the amounts that should be allocated to Salem Company's assets on the consolidated financial statements workpaper on January 1, 2020. R. Prenare the January 1, 2020, consolidated financial statements workpaper entries to elimi nate the investment account and to allocate the difference between book value and the valu implied by the purchase price. SE 5-5 T-Account Calculation of Controlling and Noncontrolling Interest in interest in Consolidated Ne Income LO 4 On January 1, 2019, P Company purchased an 80% interest in s Company many purchased an 80% interest in s Company for $600,000, at whic time S Company had retained earnings of $300,000 and capital stock of $350.000 between book value and the value implied by the purchase price was entirely att plied by the purchase price was entirely attributable to a pate with a remaining useful life of 10 years. Assume that P and Companies neported net income from al