fx A B C D E F G H I J K L M N P Q R 1 Question #3 K35 -234 $1,80,000 cash On December 31, 05, Walter, the CEO of Blue Co. has just acquired a 80% stake in Chip Co. The purchase Price was With an additional payment of $60,000 in two years if certain conditions are meet 5 The net present value of this additional payment is estimated at $33,400 6 7 The balance sheets of the respective companies as at the date of acquisition is as set out below. Unless otherwise indicated, fair value is equal to carrying value 8 9 Blue Chip 10 Fair Value 11 12 Cash 1,80,000 36,000 13 Accounts receivable 1,00,000 40,000 14 Inventory 60,000 24,000 35,364 15 PPE (net) 2,00,000 80,000 85,885 16 Trade nark 12,000 15,000 17 Goodwill 8,000 18 19 5,40,000 2,00,000 20 21 Accounts payable 80,000 50,000 S T U V W K35 fx A B C D E F G H | J K L M N 34 35 36 37 38 39 222222222223322 19 5,40,000 2,00,000 20 21 Accounts payable 80,000 50,000 Bonds payable 3,20,000 20,000 24,000 24 Share capital 90,000 80,000 25 Retained earnings 50,000 50,000 26 27 28 5,40,000 2,00,000 29 30 Required 31 Walter has heard there are two ways to account for the purchase, using the Fair Value of Net Identifable Assets (FVNIA) method and the entity method. He wants to use the Entity Metod. Can you advise him, provide any calculations you think might be useful to faclitate your answer. P Q R S U V W