Question
Eliminating Entries, Previously Unreported Intangibles, Goodwill Pirin Company acquires all of the voting stock of Skoda Automotive for $40 million in cash. Skodas balance sheet
Eliminating Entries, Previously Unreported Intangibles, Goodwill
Pirin Company acquires all of the voting stock of Skoda Automotive for $40 million in cash. Skodas balance sheet accounts at the date of acquisition are listed below.
(in millions) | Dr (Cr) |
---|---|
Current assets | $1.2 |
Property, plant and equipment | 10.8 |
Current liabilities | (2.0) |
Long-term liabilities | (7.9) |
Capital stock | (0.8) |
Retained earnings | (1.6) |
Accumulated other comprehensive income | 0.3 |
Total | $0.0 |
Date-of-acquisition book values approximate fair value for all reported assets and liabilities. The following previously unreported intangibles are identified as belonging to Skoda, along with their estimated fair values at the date of acquisition (in millions):
Synergies with Pirin technologies | $2.0 |
Order backlogs | 1.5 |
Technical expertise of workforce | 8.0 |
Cost savings on future contracts | 3.5 |
Developed technology | 6.0 |
Required
a. Prepare a schedule calculating the goodwill to be recognized for this acquisition.
Do not use negative signs with your answers.
Enter answers in millions (do not round answers).
Acquisition cost | $Answer | ||
Skodas book value | Answer | ||
Excess of acquisition cost over book value | Answer | ||
Excess of fair value over book value: | |||
Order backlogs | Answer | ||
Developed technology | Answer | Answer | |
Goodwill | $Answer |
b. Prepare the eliminating entries necessary to consolidate the balance sheet accounts of Pirin and Skoda at the date of acquisition.
Enter answers in millions. Do not round answers.
Ref. | Description | Debit | Credit | |
---|---|---|---|---|
(E) | Capital stock | Answer | Answer | |
AnswerAOCIGoodwillInvestment in SkodaRetained earningsInvestment in Skoda | Answer | Answer | ||
AnswerAOCIGoodwillInvestment in SkodaRetained earningsInvestment in Skoda | Answer | Answer | ||
Investment in Skoda | Answer | Answer | ||
(R) | Order backlogs | Answer | Answer | |
Developed technology | Answer | Answer | ||
AnswerAOCIGoodwillInvestment in SkodaRetained earningsInvestment in Skoda | Answer | Answer | ||
AnswerAOCIGoodwillInvestment in SkodaRetained earningsInvestment in Skoda | Answer | Answer |
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