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PLEASE ANSWER THIS QUESTION IMMEDIATELY DUE TO ME REPOSTING 7 TIMES On January 1, 2021, Waddington Company acquired Middleton Co. by issuing 55,000 shares of

PLEASE ANSWER THIS QUESTION IMMEDIATELY DUE TO ME REPOSTING 7 TIMES

On January 1, 2021, Waddington Company acquired Middleton Co. by issuing 55,000 shares of its common Stock with a market value of $20 per share. A building on subs books was undervalued by $100,000, resulting in annual amortization of $10,000. Also, there was an unrecorded customer list valued at $150,000, resulting in annual amortization of $15,000; as well as a 10-year franchise agreement valued at $125,000. The separate 2021 financial statements for Waddington and Middleton follow.

Waddington

Middleton

Sales revenue

$3,600,000

$ 975,000

Cost of goods sold

(2,520,000)

(585,000)

Gross profit

1,080,000

390,000

Operating expenses

(684,000)

(253,500)

Equity income

99,000

_

Net Income

$ 495,000

$ 136,500

Retained Earnings, 1/1/21

$1,830,500

$ 503,750

Net income

495,000

136,500

Dividends

(32,040)

(20,475)

Retained Earnings, 12/31/21

$2,293,460

$ 619,775

Cash and receivables

$ 772,275

$ 477,425

Inventory

698,400

290,550

Equity investment

1,178,525

Property, plant & equipment (Net)

3,719,520

537,550

Total Assets

$6,368,720

$1,305,525

Accounts payable

$ 263,520

$ 92,950

Accrued liabilities

313,200

121,550

Notes payable

1,250,000

325,000

Common stock

407,000

65,000

Additional paid-in capital

1,824,040

81,250

Retained Earnings, 12/31/11

2,293,400

619,775

Total Liabilities and Equities

$6,368,720

$1,305,525

  1. Prepare FV allocation schedule

b. Prepare all necessary consolidation entries for 2021 consolidated financial statements.

  1. Now assume that at year-end a goodwill impairment test is conducted before the consolidated statements are issued. The estimated fair value of the subsidiary is $1,100,000. The fair value of the identifiable net assets is $1,050,000. Prepare any journal entries resulting from the test.

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