PL Fortuna Company issued 70.000 shares of Spursteck with a fair value of SIS per share, for 80% of the outstanding shares of Acappella Company. The firms had the following separate balance sheets prior to the acquisition: Fortuna $2,100,000 4.600.000 Zoot Current assets Property, plant, and equipment (net) Goodwill Teulasts Acapella S 960,000 1.300.000 240.000 2.500.000 56,200.000 $ 800,000 $3.000.000 800,000 Liabilities and Stockholders' Equity Liabilities Common stock (51 ) Common stock is par Paid-in capital in excess of par Retained camnings b ilities and equity 2.300.000 700.000 56.700,000 200.000 300.000 100.000 $2.500.000 T Book values oqual fair values for the assets and liabilities of Acappella Company, except for the property. plant and equipment, which has a fair value of $1.600.000 Compute goodwill or gain recognized in the consolidated statements (10 points) P2. On January 1, 2013, Parent Company purchased 80% of the common stock of Subsidiary Company for $280,000. On this date, Subsidiary had total owners' equity of S250.000 (common stock $30.000 other paid-in capital, $80,000, and retained carings, S150,000). Any excess of cost over book value is due to the under or overvaluation of certain assets and liabilities. Inventory, which was sold in the third quarter is undervalued $5.000. Land is undervalued $20.000. Buildings and equipment have a fair value which exceeds book value by $30,000, and a 5-year expected life. Bonds payable are overvalued $10,000. The remaining excess, if any, is due to goodwill Subsidiary had net income of $60,000 and paid $2.000 in dividends during 2013. Assume that Parent uses equity method to record its investment (1) Provide all eliminations as of December 31, 2013 (10 points). plant, and equipment, which has a lair value of $1.600.000. Compute goodwill or gain recognized in the consolidated statements (10 points). in the consolidated statements (10 points) On January 1, 2013, Parent Company purchased 80% of the common stock of Subsidiary Company for $280,000. On this date, Subsidiary had total owners' equity of $250,000 (common stock $20,000; other paid-in capital, $80,000; and retained earnings, $150,000). Any excess of cost over book value is due to the under or overvaluation of certain assets and liabilities. Inventory, which was sold in the third quarter, lued $5.000. Land is undervalued $20,000. Buildings and equipment have a fair value which exceeds book value by $30,000, and a 5-year expected life. Bonds payable are overvalued $10,000. The remaining excess, if any, is due to goodwill. "ubsidiary had net income of $60,000 and paid $2,000 in dividends during 2013. sume that Parent uses equity method to record its investment. 1) Provide all eliminations as of December 31, 2013 (10 points)
