Question
Computation and Allocation of Difference (CAD) Schedule. % of ownership = 75% 25% 100% Non Controlling Parent Interest (NCI) Total Implied Value Fair Value Given
Computation and Allocation of Difference (CAD) Schedule. | ||||||||||||
% of ownership = | 75% | 25% | 100% | |||||||||
Non Controlling | ||||||||||||
Parent | Interest (NCI) | Total Implied Value | ||||||||||
Fair Value Given Up | $ 31,000,000 | $ 10,333,333 | $ 41,333,333 | |||||||||
Book Value Received | $ 10,331,250 | $ 3,443,750 | $ 13,775,000 | |||||||||
Difference | $ 20,668,750 | $ 6,889,583 | $ 27,558,333 |
Account (1) Debit Credit Common Stock Smooth Solutions $ 125,000
APIC Smooth Solutions $ 11,500,000 RE Smooth Solutions $ 2,150,000 Difference $ 27,558,000
Investment in Subsidiary Smooth Solutions $31,000,000
NCI $10,333,333
The CAD first compares the fair value given up to the book value received. The next question is to investigate whether there are any assets and liabilities that have a fair value that is different from book value. This information is used to both determine if there is goodwill (or gain) and to complete the 2nd part of the workpaper entry. The second workpaper entry is to properly allocate the difference account.
Q9. Prepare Entry - Complete the workpaper entry to allocate the difference account. Note: This entry will be a number of line items.
Account (2) Debit Credit
Q10. - True or False - The balance sheet of Paper & Inc. Corp. has a line item Investment in Subsidiary with a balance of $31,000,000. This balance is the total implied value of the subsidiary. Explain your answer.
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