Question
On January 1, 2020, Barber Corp. paid $1,160,000 to acquire Thompson Co. Thompson maintained separate incorporation. Barber used the equity method to account for the
On January 1, 2020, Barber Corp. paid $1,160,000 to acquire Thompson Co. Thompson maintained separate incorporation. Barber used the equity method to account for the investment. The following information is available for Thompsons assets, liabilities, and stockholders' equity accounts on January 1, 2020:
| Book Value | Fair Value | |||||
| Current assets | $ | 130,000 | $ | 130,000 | ||
| Land | 75,000 | 193,000 | ||||
| Building (twenty year life) | 250,000 | 276,000 | ||||
| Equipment (ten year life) | 540,000 | 518,000 | ||||
| Current liabilities | 26,000 | 26,000 | ||||
| Long-term liabilities | 124,000 | 124,000 | ||||
| Common stock | 233,000 | |||||
| Additional paid-in capital | 389,000 | |||||
| Retained earnings | 223,000 | |||||
Thompson earned net income for 2020 of $134,000 and paid dividends of $51,000 during the year.
The 2020 total excess amortization of fair-value allocations is calculated to be
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The Wall Street Mba
Authors: Reuben Advani
2nd Edition
007178831X, 9780071788311
