PLEASE CHECK MY HOMEWORK TO SEE IF ALL THE ENTRIES ARE CORRECT.

1.The Paris Company purchased an 80% interest in Seine, Inc. for $600,000 on July 1, 2015, when Seine had the following balance sheet:

Assets

Accounts receivable

$50,000

Inventory

120,000

Land

80,000

Building

270,000

Equipment

80,000

Total

$600,000

Liabilities and Equity

Current liabilities

$100,000

Common stock, $5 par

60,000

Paid-in capital in excess of par

140,000

Retained earnings (July 1)

300,000

Total

$600,000

The inventory is understated by $20,000 and is sold in the third quarter of 2015. The building has a fair value of $320,000 and a 10-year remaining life. The equipment has a fair value of $120,000 and a remaining life of 5 years. Any remaining excess is attributed to goodwill.

From July 1 through June 30, 2016, Seine had net income of $100,000 and paid $10,000 in dividends.

Assume that Paris uses the equity method to record its investment in Seine.

Required:

a.

Prepare determination and distribution of excess schedule as of July 1, 2015.

Determination and Distribution of Excess Schedule Company Value Fair Value of Subsidiary 750,000 Less Book Value of Interest Acquired Common Stock 60,000 Paid in Excess 140,000 Retained Earnings 300,000 Total Equity 500,000 Interest Acquired 100% Book Value Excess of Cost over Book Value 250,000 Accounts Adjusted Inventory 20,000 Building 50,000 Equipment 40,000 Goodwill 140,000 Total 250,000 Parent Price Life 600,000 500,000 80% 400,000 200,000 10 NCI 150,000 500,000 20% | 100,000 50,000 Amor/Year 5,000 8,000