Question
On January 1, 2019 Vacker Co. acquired 70% of Carper Inc. by paying $650,000. On this date, the NCI fair value was $162,000. Carper reported
On January 1, 2019 Vacker Co. acquired 70% of Carper Inc. by paying $650,000. On this date, the NCI fair value was $162,000. Carper reported common stock on the date of $420,000 with retained earning of $252,000. A building was undervalued in the company's financial records by $28,000. This building had a ten-year remain life. Copyrights of $80,000 were to be recognized and amortized over 20 years.
Carper earned income and paid cash dividends as follows:
Year
Net Income
Dividends Paid
2018
$105,000
$54,600
2019
134,400
61,600
2020
154,000
84,000
On December 31, 2020, Vacker owed $30,800 to Carper. There have been no changes in Carper's common stock account since the acquisition.
1.Show the computation of Excess, allocation of Excess and amortization on Excess.
2.If the equity method had been applied by Vacker for this acquisition, please make following consolidation entries needed as of December 31, 2020?
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Retailing Management
Authors: Michael Levy, Barton Weitz, Dea Watson
4th Canadian Edition
70893209, 978-0070893207
