On January 1, 2015, Smith Company acquired 80,000 shares of Bonn Logistics, Inc for $32 per share This gave Smith a 35 percent ownership of Bonn and Smith utilized the equity method to account for this acquisition As of the date of acquisition, Bonn had assets with a book value of $7,200,000 and liabilities of $1,750,000 Equipment held by Bonn appraised at $50,000 above book value and was considered to have a 10 year remaining life In addition, Bonns building was appraised for $1,300,000, but had a book value of $800,000 with a 20 year remaining life Any remaining excess cost was attributable to goodwill Depreciation and amortization utilizes the straight line method Income and dividends for the years ended December 31, 2015, 2016, and 2017, are as follows, respectively Income $185,000, $275,000, $340,000 Dividends $32,000, $45,000, $62,000 In addition, Smith sold inventory to Bonn beginning in 2014 and continuing through the year end date of December 31, 2017 The detail of the transactions and the amount remaining in inventory for Smith at the end of each year is as follows Required Prepare a schedule that identifies the allocation of the investment amount by Smith in the acquisition of Bonn Make sure to identify the individual steps parts a you develop and display the solution Develop a schedule to illustrate the amount of excess amortization associated with the undervalued assets Prepare a schedule to support any profit in inventory deferral or recognition for each of the three years Prepare a schedule computing the equity income to be recognized by Smith during 2015, 2016, and 2017 Prepare a schedule that tracks the amount in the Investment in Bonn account on the books of Smith for each of the three years ending December 31, 2017 The final solution will include an Excel worksheet with all supporting information included and the worksheet linking properly to the appropriate calculated values 2015 Smith sold to Bonn Cost Selling Gross profit Remaining in inventory at selling price $ AlA HA 2014 60,000 75,000 15,000 $ $ $ 85,800 $ 110,000 $ 24,200 $ 2016 134,750 $ 175,000 $ 40,250 $ 2017 157,500 210,000 52,500 6,000 $ 30,000 $ 45,000 $ 60,000

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On January 1, 2015, Smith Company acquired 80,000 shares of Bonn Logistics, Inc. for $32 per share. This gave Smith a 35 percent ownership of

On January 1, 2015, Smith Company acquired 80,000 shares of Bonn Logistics, Inc. for $32 per share. This gave Smith a 35 percent ownership of Bonn and Smith utilized the equity method to account for this acquisition.

As of the date of acquisition, Bonn had assets with a book value of $7,200,000 and liabilities of $1,750,000. Equipment held by Bonn appraised at $50,000 above book value and was considered to have a 10-year remaining life. In addition, Bonns building was appraised for $1,300,000, but had a book value of $800,000 with a 20-year remaining life. Any remaining excess cost was attributable to goodwill. Depreciation and amortization utilizes the straight-line method.

Income and dividends for the years ended December 31, 2015, 2016, and 2017, are as follows, respectively: Income = $185,000, $275,000, $340,000; Dividends = $32,000, $45,000, $62,000.

In addition, Smith sold inventory to Bonn beginning in 2014 and continuing through the year-end date of December 31, 2017. The detail of the transactions and the amount remaining in inventory for Smith at the end of each year is as follows:

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Required:

Prepare a schedule that identifies the allocation of the investment amount by Smith in the acquisition of Bonn. Make sure to identify the individual steps / parts a you develop and display the solution.
Develop a schedule to illustrate the amount of excess amortization associated with the undervalued assets.
Prepare a schedule to support any profit in inventory deferral or recognition for each of the three years.
Prepare a schedule computing the equity income to be recognized by Smith during 2015, 2016, and 2017.
Prepare a schedule that tracks the amount in the Investment in Bonn account on the books of Smith for each of the three years ending December 31, 2017.

The final solution will include an Excel worksheet with all supporting information included and the worksheet linking properly to the appropriate calculated values.

2015 Smith sold to Bonn Cost Selling Gross profit Remaining in inventory at selling price $ AlA HA 2014 60,000 75,000 15,000 $ $ $ 85,800 $ 110,000 $ 24,200 $ 2016 134,750 $ 175,000 $ 40,250 $ 2017 157,500 210,000 52,500 6,000 $ 30,000 $ 45,000 $ 60,000