Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Branson paid $607.500 cash for all of the outstanding common stock of Wolfpack, Inc., on January 1, 2020. On that date, the subsidiary had a

image text in transcribed
Branson paid $607.500 cash for all of the outstanding common stock of Wolfpack, Inc., on January 1, 2020. On that date, the subsidiary had a book value of $373,000 (common stock of $200,000 and retained earnings of $173,000), although various unrecorded royalty agreements (10-year remaining life) were assessed at a $199.000 fair value. Any remaining excess fair value was considered goodwill In negotiating the acquisition price, Branson also promised to pay Wolfpack's former owners an additional $45,000 if Wolfpack's income exceeded $150,000 total over the first two years after the acquisition. At the acquisition date, Branson estimated the probability-adjusted present value of this contingent consideration at $31.500. On December 31, 2020, based on Wolfpack's earnings to date. Branson increased the value of the contingency to $36,000, During the subsequent two years, Wolfpack reported the following amounts for income and dividends Net Income Dividends Declared $ 80, see 90,500 35,00 2020 2021 $ 25,000 In keeping with the original acquisition agreement, on December 31, 2021. Branson paid the additional $45.000 performance fee to Wolfpack's previous owners. Prepare each of the following: o. Branson's entry to record the acquisition of the shares of its Wolfpack subsidiary b. Branson's entries at the end of 2020 and 2021 to adjust its contingent performance obligation for changes in fair value and the December 31, 2021, payment c. Prepare consolidation worksheet entries as of December 31, 2021, assuming that Branson has applied the equity method. d. Prepare consolidation worksheet entries as of December 31, 2021, assuming that Branson has applied the initial value method. Complete this question by entering your answers in the tabs below. Required A Required B Required Required D

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quality Control Procedure For Statutory Financial Audit An Empirical Study

Authors: Siddhartha Sankar Saha, Mitrendu Narayan Roy

1st Edition

1787142272, 9781787142275

More Books

Students also viewed these Accounting questions

Question

What, if any, limitations exist for arbitrators?

Answered: 1 week ago

Question

What are the disadvantages of arbitration?

Answered: 1 week ago