Advanced Accounting I Chapter 5 Allocation and Depreciation of Differences Between Implied and Book Value Problem 1 Time Warner acquires all of the stock of Northsouth Cable on January 1,2013, for $40,000,000 in cash. Northsouth's book value at the date of acquisition is Common stock, $1.50 Retained earnings Total s 1,000,000-' .sos, sous,000 3,500,000 500 s recorded assets and liabilities are carried at fair value, but it has previously unrecorded c assets valued at $10,000,000 that are capitalizable under the requirements of ASC Topic 805. These intangibles have an estimated life of 5 years, straight-line. Northsouth reports net income of $8,000,000 for 2013, and pays dividends of $1,500,000. It is determined through impairment testing that acquired goodwill is impaired by $600,0 Time Warner uses the complete equity riethod to account for its investment in Northsouth on its own books Required a. Present, in journal entry form, the eliminating entries needed to consolidate the trial balances of Time Warner and Northsouth at December 31, 2013 b. Calculate the amount Time Warner reports for 2013 as equity in net income of Northsouth on its own books. Problem 2 Complete the following consolidation worksheet assuming that Paxco uses the equity method. (Force out certain amounts in the Paxco and Saxco columns, as necessary.) intangible and the customer-related intangibles are not impaired. PAXCO AND SAXCO Advanced Accounting I Chapter 5 Allocation and Depreciation of Differences Between Implied and Book Value Problem 1 Time Warner acquires all of the stock of Northsouth Cable on January 1,2013, for $40,000,000 in cash. Northsouth's book value at the date of acquisition is Common stock, $1.50 Retained earnings Total s 1,000,000-' .sos, sous,000 3,500,000 500 s recorded assets and liabilities are carried at fair value, but it has previously unrecorded c assets valued at $10,000,000 that are capitalizable under the requirements of ASC Topic 805. These intangibles have an estimated life of 5 years, straight-line. Northsouth reports net income of $8,000,000 for 2013, and pays dividends of $1,500,000. It is determined through impairment testing that acquired goodwill is impaired by $600,0 Time Warner uses the complete equity riethod to account for its investment in Northsouth on its own books Required a. Present, in journal entry form, the eliminating entries needed to consolidate the trial balances of Time Warner and Northsouth at December 31, 2013 b. Calculate the amount Time Warner reports for 2013 as equity in net income of Northsouth on its own books. Problem 2 Complete the following consolidation worksheet assuming that Paxco uses the equity method. (Force out certain amounts in the Paxco and Saxco columns, as necessary.) intangible and the customer-related intangibles are not impaired. PAXCO AND SAXCO