Question
I am not sure how to fill out this table given the information below. Life (if applicable) Annual Excess Amortizations (if applicable) Consideration transferred 1/1/20
I am not sure how to fill out this table given the information below.
Life (if applicable)
Annual Excess Amortizations (if applicable)
Consideration transferred 1/1/20
Book value (given)
Fair value in excess of book value
Allocation to equipment based on difference in fair value and book value
Goodwill
Total
This is the information we are given
Pueblo Corporation acquired all of Spartan Company's outstanding stock on January 1, 2018, for $1,320,000 cash. Spartan's accounting records reflected net assets on that date of $1,034,000, although equipment with a 10-year life was undervalued on the records by $198,000. Any recognized goodwill is considered to have an indefinite life.
Spartan reports net income in 2018 of $198,000 and $220,000 in 2019. The subsidiary paid dividends of $44,000 in each of these two years.
Financial figures for the year ending December 31, 2020, follow. Credit balances are indicated by parentheses.
Pueblo
Spartan
Revenues.
$(1,760,000)
$(1,320,000)
Cost of goods sold
220,000
330,000
Depreciation expense.
660,000
770,000
Investment income. .
(44,000)
-0-
Net income
$(924,000)
$(220,000)
Retained earnings 1/1/20 . .
$(2,420,000)
$(704,000)
Net income
(924,000)
(220,000)
Dividends paid
264,000
44,000
Retained earnings, 12/31/17
$(3,080,000)
$(880,000)
Current assets.
$660,000
$220,000
Investment in subsidiary
1,320,000
-0-
Equipment (net)
1,980,000
1,320,000
Buildings (net)
1,760,000
880,000
Land.
1,320,000
220,000
Total assets
$7,040,000
$2,640,000
Liabilities.
$(1,980,000)
$(1,100,000)
Common stock.
(1,980,000)
(660,000)
Retained earnings . .
(3,080,000)
(880,000)
Total liabilities and equity.
$(7,040,000)
$(2,640,000)
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