Date of Acquisition Consolidation Eliminating Entries Proline Company acquired 70 percent of Saturn Corporation's common stock...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Date of Acquisition Consolidation Eliminating Entries Proline Company acquired 70 percent of Saturn Corporation's common stock for $150 million in cash and stock. The estimated fair value of the noncontrolling interest was $50 million. At the date of acquisition, Saturn's book value was $30.0 30.000000 million, consisting of capital stock of $100,000, additional paid-in capital of $32.4 million, accumulated other comprehensive loss of $500,000, and treasury stock of $2.0 million. Saturn reports its identifiable net assets at amounts approximating fair value, with these exceptions: property is overvalued by $50 million, deferred tax liabilities resulting from the acquisition are $5 million, previously unreported identifiable intangibles have a fair value of $20 million, and Saturn has $10 million of goodwill on its books from a previous acquisition. a. Calculate total goodwill for this acquisition and its allocation to the controlling and noncontrolling interests. Total goodwill: 205,000,000 Goodwill to Proline (controlling interest): Goodwill to non-controlling interests: 155,000,000 50,000,000 x b. Prepare the working paper eliminating entries needed to consolidate the accounts of Proline and Saturn at the date of acquisition. Debit Credit (E) Accumulated other comprehensive loss 500,000 500,000 x Additional paid-in capital Capital stock Deferred tax liabilities Goodwill (old) Identifiable intangibles To eliminate the subsidiary's equity accounts (R) Property Deferred tax liabilities 32,400,000 32,400,000 x 100,000 100,000 x 5,000,000 5,000,000 x 10,000,000 20,000,000 10,000,000 x 20,000,000 x Identifiable intangibles Goodwill (old) 50,000,000 50,000,000 x 5,000,000 20,000,000 5,000,000 x 20,000,000 x 10,000,000 10,000,000 x 500,000 2,000,000 500,000 x 2,000,000 x 155,000,000 155,000,000 x Accumulated other comprehensive loss Treasury stock Goodwill (new) To revalue subsidiary's assets and liabilities to fair value Date of Acquisition Consolidation Eliminating Entries Proline Company acquired 70 percent of Saturn Corporation's common stock for $150 million in cash and stock. The estimated fair value of the noncontrolling interest was $50 million. At the date of acquisition, Saturn's book value was $30.0 30.000000 million, consisting of capital stock of $100,000, additional paid-in capital of $32.4 million, accumulated other comprehensive loss of $500,000, and treasury stock of $2.0 million. Saturn reports its identifiable net assets at amounts approximating fair value, with these exceptions: property is overvalued by $50 million, deferred tax liabilities resulting from the acquisition are $5 million, previously unreported identifiable intangibles have a fair value of $20 million, and Saturn has $10 million of goodwill on its books from a previous acquisition. a. Calculate total goodwill for this acquisition and its allocation to the controlling and noncontrolling interests. Total goodwill: 205,000,000 Goodwill to Proline (controlling interest): Goodwill to non-controlling interests: 155,000,000 50,000,000 x b. Prepare the working paper eliminating entries needed to consolidate the accounts of Proline and Saturn at the date of acquisition. Debit Credit (E) Accumulated other comprehensive loss 500,000 500,000 x Additional paid-in capital Capital stock Deferred tax liabilities Goodwill (old) Identifiable intangibles To eliminate the subsidiary's equity accounts (R) Property Deferred tax liabilities 32,400,000 32,400,000 x 100,000 100,000 x 5,000,000 5,000,000 x 10,000,000 20,000,000 10,000,000 x 20,000,000 x Identifiable intangibles Goodwill (old) 50,000,000 50,000,000 x 5,000,000 20,000,000 5,000,000 x 20,000,000 x 10,000,000 10,000,000 x 500,000 2,000,000 500,000 x 2,000,000 x 155,000,000 155,000,000 x Accumulated other comprehensive loss Treasury stock Goodwill (new) To revalue subsidiary's assets and liabilities to fair value
Expert Answer:
Related Book For
Advanced Accounting
ISBN: 9781260247824
14th Edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
Students also viewed these accounting questions
-
Although the evaluation of capital budget proposals is based on decision criteria involving traditional discounted cash flow analysis and some form of risk assessment of alternative investment...
-
9. What does market capitalization mean? What does it say about investment in the currency? Why do we invest in particular currencies and not in others? 10. Differentiate between volatility and...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Describe a setting (either real or fictitious) that you have been in where either your emotions or the emotions of someone else had more impact on what was being communicated than it should have had....
-
Air expands isentropically from 170 psia and 200F to 60 psia. Calculate the ratio of the initial to final speed of sound.
-
Find the period of small oscillations in a vertical plane performed by a ball of mass m = 40 g fixed at the middle of a horizontally stretched string l = 1.0 m in length. The tension of the string is...
-
Here are incomplete financial statements for Liam, Inc. Instructions Calculate the missing amounts. Cash Inventory Assets $ 7,000 LIAM, INC. Balance Sheet Liabilities and Stockholders' Equity...
-
Delmont Company entered into these transactions during May 2012. 1. Purchased computers for office use for $30,000 from Dell on account. 2. Paid $4,000 cash for May rent on storage space. 3. Received...
-
MY Autobody's adjusted trial balance on December 3 1 , 2 0 2 3 , appears in the work sheet as follows: \ table [ [ No . , Account,Debit,Credit ] , [ 1 0 1 , Cash,$ 2 7 , 6 0 0 , ] , [ 1 2 4 , Shop...
-
Identify the following users as either External users or Internal users. a. Customers b. Suppliers c. External auditors d. Business press e. Managers f. District attorney g. Shareholders h. Lenders...
-
Use Newton's Method to estimate 5SQRT(35) to four decimal places, starting with the guess 2. What is the third to last guess (the last guess before getting two guesses that have the same value)?...
-
Find all the critical numbers of f(x) = x+3x.
-
Uber is considering investing in an autonomous fleet of 1,000 delivery drones, each priced at $50,000 to manufacture today. The project will also cost $3,000,000 in AI software development now and...
-
The following data shows the distribution of bank branches in Canada in 2008 and 2018. Complete the last two columns of the table by calculating the absolute increase or decrease in branches, and the...
-
Bramble Inc. purchased Manzanita Marine on June 1 , 2 0 1 8 for $ 2 5 , 0 1 5 , 0 0 0 and recorded goodwill of $ 3 , 1 0 0 , 0 0 0 in connection with the purchase. At December 3 1 , 2 0 2 1 , the...
-
1.As part of a capital budget, the equipment will be sold at the end of the project for $200,000.It will have a book value of $15,000. The tax rate is 30%. What is the net salvage value? 1.What is...
-
The market and Stock J have the following probability distributions. Probability Rm . Rj 0.3 15% . 20% 0.4 . 9 5 0.3 18 12 a. calculate the expected rates of return for the market and stock J b....
-
Briefly discuss the implications of the financial statement presentation project for the reporting of stockholders equity.
-
What are the typical cash inflows from financing activities? What are the typical cash outflows for financing activities?
-
Under the indirect method, depreciation expense is added to net earnings to compute cash flows from operating activities. Does depreciation cause an inflow of cash?
-
Explain why a $50,000 increase in inventory during the year must be included in developing cash flows for operating activities under the indirect method.
Study smarter with the SolutionInn App