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Paramount Corporation acquired its 7 5 percent investment in Sun Corporation on January 1 , 2 0 1 8 , for $ 3 , 1
Paramount Corporation acquired its percent investment in Sun Corporation on January for $ and accounts for its investment internally using the complete equity method. At the acquisition date, Sun's book value consisted of $ in capital stock and $ in retained earnings, and the estimated fair value of the percent noncontrolling interest was $ The fair values of Suns assets and liabilities were equal to their carrying values, except for the following items:
Fair value less Book value
Accounts receivable $
Inventory
Equipment years, straightline
Patents years, straightline
Deferred tax liabilities created as a result of the nontaxable acquisition
The inventory was sold during the first three years following the acquisition. Deferred tax liabilities of $ were reversed during An impairment test made at the end of indicates a remaining value of $ for the goodwill recognized as a result of the acquisition. Suns shareholders equity is $ including $ of retained earnings, at the end of
For all answers below: Enter answers using all zeros, do not abbreviate to thousands or millions.
Required
a Calculate the amount of goodwill initially recognized as a result of the acquisition, and its allocation to the controlling and noncontrolling interests.
Allocation of goodwill
Goodwill Answer
Paramounts share of goodwill: Answer
Noncontrolling interests share of goodwill Answer
b Calculate the balance in the investment account, carried on Paramounts books, and the value of the noncontrolling interest, reported in the equity section of the consolidated balance sheet, as of the end of
Balances as of yearend
Investment in Sun Answer
Noncontrolling interest in Sun Answer
c Assume eliminating entry C to reverse Paramounts equity method entries for has been made. Prepare eliminating entries E and R to adjust Suns assets to the correct values as of the beginning of eliminate the remainder of the investment, and recognize the beginningof value of the noncontrolling interest.
Consolidation Journal
Description Debit Credit
E
Answer
Shareholders' equitySun
Answer
Answer
Answer
Investment in Sun
Answer
Answer
Noncontrolling interest in Sun Answer
Answer
R
Answer
Investment in Sun
Answer
Answer
Equipment, net Answer
Answer
Deferred tax liabilities Answer
Answer
Answer
Goodwill
Answer
Answer
Noncontrolling interest in Sun Answer
Answer
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