Use the following information for problems 1 On January 1, 2012, Adams acquires 100% of Baker in a transaction accoun the acquisition method. Adams will use equity accounting for its investment Baker will remain a wholly owned subsidiary of Adams. The following is nt in a about this acquisition. -4 with a $5 par and issuance costs $20 market value. Legal and accounting costs were $50,000. Stock is $20,000. If Baker has net income of $50,000 in 2012, Adams will pay anWer To pay for this purchase, Adams issues 20,000 shares of common s $100,000. At acquisition date there is a 40% probability ofthis occurring. The book value of net assets acquired of Baker was $200,000 at acquisition date was willing to pay in excess of book value to acquire Baker because Baker hadda (10 year life) with a book value of $300,000 and a fair value of $340,000. Baker has $40,000 in net income in 2012 and pays a dividend of $30,000. Adams ha S100,000 of net income in 2012 and pays a dividend of $70,000. Prepare an investment analysis at date of acquisition, including the follow a. Calculate the amount debited to the investment b. Calculate the premium over book value c. Determine the amount of goodwill or if it is a bargain purchase. d. How much is the excess depreciation that will be reflected as consolidation 1. entry E in 2012? 2. How much are consolidated dividends in 2012? 3.AtDecember 3.2014 assume Adams has Buildings with a book value of $500,000 and fair of $400,000 and a fair value of $450,000. a. What is the CONSOLIDATED total for buildings at that date? b. Prepare alue of $600,000 and Baker has Buildings with a book value of December 31, 2014. "A" tha t will show up on the consolidated worksheet as WtdK 4. How much is consolidated Equity Income in 2012. Use the following information for problems 1 On January 1, 2012, Adams acquires 100% of Baker in a transaction accoun the acquisition method. Adams will use equity accounting for its investment Baker will remain a wholly owned subsidiary of Adams. The following is nt in a about this acquisition. -4 with a $5 par and issuance costs $20 market value. Legal and accounting costs were $50,000. Stock is $20,000. If Baker has net income of $50,000 in 2012, Adams will pay anWer To pay for this purchase, Adams issues 20,000 shares of common s $100,000. At acquisition date there is a 40% probability ofthis occurring. The book value of net assets acquired of Baker was $200,000 at acquisition date was willing to pay in excess of book value to acquire Baker because Baker hadda (10 year life) with a book value of $300,000 and a fair value of $340,000. Baker has $40,000 in net income in 2012 and pays a dividend of $30,000. Adams ha S100,000 of net income in 2012 and pays a dividend of $70,000. Prepare an investment analysis at date of acquisition, including the follow a. Calculate the amount debited to the investment b. Calculate the premium over book value c. Determine the amount of goodwill or if it is a bargain purchase. d. How much is the excess depreciation that will be reflected as consolidation 1. entry E in 2012? 2. How much are consolidated dividends in 2012? 3.AtDecember 3.2014 assume Adams has Buildings with a book value of $500,000 and fair of $400,000 and a fair value of $450,000. a. What is the CONSOLIDATED total for buildings at that date? b. Prepare alue of $600,000 and Baker has Buildings with a book value of December 31, 2014. "A" tha t will show up on the consolidated worksheet as WtdK 4. How much is consolidated Equity Income in 2012
