Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2015, for $802,720 cash. At the acquisition date, Sierras total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierras book value was only $690,000. Also, several individual items on Sierras financial records had fair values that differed from their book values as follows:

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Student Name: Damai Perez Class: Problem 04-37 PADRE, INC. AND SIERRA CORPORATION - Purchase price allocation and annual amortization Acquisition-date subsidiary fair value Book value of subsidiary Fair value in excess of book value $ 1,003,400 (690,000) 313,400 Correct! Allocations to specific accounts based on difference between fair value and book value: Land $ Buildings and equipment Copyright Notes payable Total Annual excess amortizations: Buildings and equipment Copyright Notes payable Total $ $ $ 225,000 (24,000) 94,000 18,400 (25,000) 100,000 10,000 313,400 Life (years) 10 20 8 Excess Amortizations $ (2,500) 5,000 1,250 Totals for the business combination for the year ending December 31, 2015 PADRE, INC. AND SIERRA CORPORATION Account Name Revenues $ Balance Explanation 1,900,000 Try again! Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Consolidated net income Net income attributable to NCI Net income to Padre Company Student Name: Damai Perez Class: Problem 04-37 Retained earnings, 1/1 Dividends declared Retained earnings, 12/31 Student Name: Damai Perez Class: Problem 04-37 Current assets Investment in Sierra Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable Noncontrolling interest in Sierra Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities & equities Student Name: Damai Perez Class: Problem 04-37 PADRE, INC. AND SIERRA CORPORATION Consolidation Worksheet Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Separate company net income Consolidated net income Padre Sierra (1,394,980) 774,000 274,000 52,100 (177,120) (684,900) 432,000 11,600 6,100 9,200 - (472,000) (226,000) (1,275,000) (472,000) 260,000 (530,000) (226,000) 65,000 (1,487,000) (691,000) Current assets Investment in Sierra 856,160 927,840 764,700 Land Buildings and equipment (net) Copyright Total assets 360,000 909,000 - 65,000 275,400 115,900 3,053,000 1,221,000 (275,000) (541,000) (194,000) (176,000) (300,000) (450,000) (1,487,000) (100,000) (60,000) (691,000) (3,053,000) (1,221,000) NI to noncontrolling interest NI to Padre Company Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Accounts payable Notes payable NCI in Sierra 1/1 NCI in Sierra 12/31 Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and stockholders' equity Parentheses indicate a credit balance. Consolidation Entries Debit Credit for the year ending December 31, 2015 ERRA CORPORATION ERRA CORPORATION on Worksheet Noncontrolling Interest Consolidated Totals Given Data P04-37 Sierra Corporation outstanding common stock acquired by Padre, Inc. Cash paid by Padre, Inc. for Sierra Corporation shares Sierra's assessed fair value Book value of Sierra Corporation 80% $ $ $ 680,000 1,003,400 690,000 Book Value 65,000 $ 287,000 122,000 (176,000) Fair Value 290,000 263,000 216,000 (157,600) Sierra accounts values on 1/1/15 Land Buildings and equipment (10-year remaining life) Copyright (20-year life) Notes payable (due in 8 years) $ Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Padre, Sierra 12/31/2015 12/31/2015 $ (1,394,980) $ (684,900) 774,000 432,000 274,000 11,600 6,100 52,100 9,200 (177,120) $ (472,000) $ (226,000) Retained earnings, 1/1/15 Net income Dividends paid Retained earnings, 12/31/15 $ (1,275,000) $ (472,000) 260,000 $ (1,487,000) $ Current assets Investment in Sierra Land Buildings and equipment (net) Copyright Total assets $ Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equity $ Note: Credits are indicated by parentheses. $ 856,160 $ 927,840 360,000 909,000 3,053,000 $ (530,000) (226,000) 65,000 (691,000) 764,700 65,000 275,400 115,900 1,221,000 (275,000) $ (194,000) (541,000) (176,000) (300,000) (100,000) (450,000) (60,000) (1,487,000) (691,000) $ (3,053,000) $ (1,221,000) Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2015, for $802,7 images n January 1, 2015, for $802,720 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at ling interest, was assessed at $1,003,400 although Sierra's book value was only $690,000. Also, several individual items on Sierra's financi idual items on Sierra's financial records had fair values that differed from their book values as follows