Pacer Inc. acquired all of Spur Company's common shares for $900,000 on 1/1/20. On this date, Spur's total shareholders' equity was $360,000, and the following assets in Spur's balance sheet had fair value different from book value: On 1/1/20, Spur also had some bonds payable (maturity date 12/31/23) which have total fair value higher than book value by $12,000. Spur's 2020 reported net income was $270,000, and dividends declared totaled $150,000. Pacer used the equity method to account its investment in Spur. Pacer's 2020 own operating income was $840,000. There was no goodwill impairment loss in the first year after the acquisition. The following data were taken from each company's income statement of 2021 : The following data were taken from each company's balance sheet of 12/31/22 : Required: Compute the following amounts: 1. The amount of the (FV-BV) element in the fair value of the consideration transferred by Pacer for the acquisition of Spur: 2. The additional expense due to the expiration of the (FVBV) element in 2020: 3. The additional expense due to the expiration of the (FVBV ) element in 2021: 4. Consolidated net income of Pacer and Spur, 2020: 5. Pacer's "Equity in net income of Spur", 2020: 6. Pacer's "Investment in Spur" at 12/31/20: 7. Pacer's "Investment Income" of 2020 had the cost method been used: 8. Pacer's "Investment Income", 2020 , had the partial equity method been used 9. Pacer's "Investment in Spur". 12/31/20, under the partial equity method: 10. Goodwill (in the consolidated balance sheet), 12/31/20: 11. Cost of goods sold (in the consolidated income statement). 202I: 12. Interest expense (in the consolidated income statement), 2021: 13. Inventory (in the consolidated balance sheet), 12/31/22: 14. Equipment (net) (in the consolidated balance sheet), 12/31/22 : 15. Patents (in the consolidated balance sheet), 12/31/22: 16. Bonds payable (in the consolidated balance sheet), 12/31/22: Pacer Inc. acquired all of Spur Company's common shares for $900,000 on 1/1/20. On this date, Spur's total shareholders' equity was $360,000, and the following assets in Spur's balance sheet had fair value different from book value: On 1/1/20, Spur also had some bonds payable (maturity date 12/31/23) which have total fair value higher than book value by $12,000. Spur's 2020 reported net income was $270,000, and dividends declared totaled $150,000. Pacer used the equity method to account its investment in Spur. Pacer's 2020 own operating income was $840,000. There was no goodwill impairment loss in the first year after the acquisition. The following data were taken from each company's income statement of 2021 : The following data were taken from each company's balance sheet of 12/31/22 : Required: Compute the following amounts: 1. The amount of the (FV-BV) element in the fair value of the consideration transferred by Pacer for the acquisition of Spur: 2. The additional expense due to the expiration of the (FVBV) element in 2020: 3. The additional expense due to the expiration of the (FVBV ) element in 2021: 4. Consolidated net income of Pacer and Spur, 2020: 5. Pacer's "Equity in net income of Spur", 2020: 6. Pacer's "Investment in Spur" at 12/31/20: 7. Pacer's "Investment Income" of 2020 had the cost method been used: 8. Pacer's "Investment Income", 2020 , had the partial equity method been used 9. Pacer's "Investment in Spur". 12/31/20, under the partial equity method: 10. Goodwill (in the consolidated balance sheet), 12/31/20: 11. Cost of goods sold (in the consolidated income statement). 202I: 12. Interest expense (in the consolidated income statement), 2021: 13. Inventory (in the consolidated balance sheet), 12/31/22: 14. Equipment (net) (in the consolidated balance sheet), 12/31/22 : 15. Patents (in the consolidated balance sheet), 12/31/22: 16. Bonds payable (in the consolidated balance sheet), 12/31/22
