Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On January 1, 2020, Payne Corporation purchased a 75% interest in Salmon Company for $585,000. A summary of Salmon Companys balance sheet on that date
On January 1, 2020, Payne Corporation purchased a 75% interest in Salmon Company for $585,000. A summary of Salmon Companys balance sheet on that date revealed the following:
Book Value | Fair Value | |
Equipment | $525,000 | $705,000 |
Other assets | 150,000 | 150,000 |
$675,000 | $855,000 | |
Liabilities | $75,000 | $75,000 |
Common stock | 225,000 | |
Retained earnings | 375,000 | |
$675,000 |
The equipment had an original life of 15 years and has a remaining useful life of 10 years.
Required:
For the December 31, 2020, consolidated financial statements workpaper, prepare the workpaper entry to allocate and depreciate the difference between book value and the value implied by the purchase price assuming:
- Equipment is presented net of accumulated depreciation.
- Accumulated depreciation is presented on a separate row in the workpaper and in the consolidated statement of financial position.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started