On July 1, 2019 Patterson Limited bought 80% of Stanley Corporation for $200,000. On that date,...

Transcribed Image Text:

On July 1, 2019 Patterson Limited bought 80% of Stanley Corporation for $200,000. On that date, Stanley had common stock of $75,000 and retained earnings of $60,000. At acquisition, all assets had fair values equal to book values except for the following: Building The building owned by Stanley had a fair market value of $198,000 and was carried on the books of the company for a net book value of $166,000. The estimated useful life of the building at July 1, 2019 was 10 years. Inventory - Inventory was booked at $60,000 but had a fair market value of $45,000. This inventory was all sold by June 30, 2020. Accounts receivable - Accounts receivable had a fair value of $30,000 more than book value at July 1, 2019. These receivables were all collected by June 30, 2020. Intangible assets - Intangible assets not carried on the books of Stanley had a fair market value at the acquisition date of $34,250. The estimated remaining useful life was 20 years. Bond payable- Bonds payable on the books for $60,000 had a fair market value of $80,000. The maturity date for the bonds was June 30, 2023. It is now June 30, 2022 and you are preparing the consolidated financial statements for Patterson Limited. The individual financial statements are as follows:

Answer rating: 100% (QA)

The Answer is in the image, click to view ... View the full answer