Question
Paper purchased 12,000 of Sands 30,000 shares on 10/1/20X0 for $36,000. At 1/1/20X0, Sand had Common Stock of $30,000 and Retained Earnings of $50,000. During
Paper purchased 12,000 of Sands 30,000 shares on 10/1/20X0 for $36,000. At 1/1/20X0, Sand had Common Stock of $30,000 and Retained Earnings of $50,000. During the 12 months ended 12/31/20X0, Sand earned income of $100,000. Annual dividends of $1 per share were authorized by the Board of Directors to be paid in equal amounts at the end of each quarter. The book values and fair values of Sands assets and liabilities on 10/1/20X0 were as follows: (Note partial year acquisition)
Assets: | Sand Book Values | Sand Fair Values |
Cash | $20,000 | $20,000 |
Receivables | 30,000 | 30,000 |
Inventory (sold in November 20X0) | 25,000 | 40,000 |
Land | 27,500 | 40,000 |
Building (10 year Life) | 120,000 | 60,000 |
Equipment (5 year Life) | 40,000 | 40,000 |
Patents (5 year life) | 0 | 60,000 |
Total Assets | $262,500 | $290,000 |
|
|
|
Liabilities: |
|
|
Accounts Payable | $80,000 | $80,000 |
Notes Payable (Matures on 10/1/20X4) | 50,000 | 70,000 |
Required:
- Calculate the Difference (Excess)
- Calculate the goodwill/(bargain purchase gain)
- Prepare the purchase price allocation and amortization schedule. (Click here to download excel file), complete it, save it on your computer, and upload your response in the dropbox below)
Purchase Price Allocation and Amortization Schedule | |||||
Account | 10/1/20X0 100% Unamortized Difference | 10/1/20X0 Difference to Assign | BPG Adjustment (if needed) | 20X0 Amortization | 12/31/20X0 Unamortized Difference |
TOTALS |
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