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Posted on Aug 06, 2024

Problem 2 Pullman, Inc. acquired a controlling interest in Sierra Company on 1/1/20x1. At that time, the book value of Sierra Company's net assets was

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Problem 2 Pullman, Inc. acquired a controlling interest in Sierra Company on 1/1/20x1. At that time, the book value of Sierra Company's net assets was $16,970,000, including the following: Buildings Equipment Land Hair Value Book Value $2,700,000 3,700,000 1,700,000 Beek Value Fair Value $3,400,000 3,300,000 2,550,000 2 Remaining Life 7 years 5 years Indefinite In acquiring their controlling interest, Pullman paid $10,450,000 cash in exchange for 55% of the outstanding voting common stock of Sierra. At the time of the acquisition, the fair value of 100% of Sierra's outstanding common stock was $19,000,000 Pullman did not pay a control premium to acquire their 55% controlling interest. Any consideration paid in excess of the fair value of net assets acquired is assigned to goodwill. + The account balances for Pullman, Inc. and Sierra Company at 12/31/20x1 are as follows: Pullman, Inc. Sierra Company Revenues (298,000,000) (103,750,000) Expenses 271,000,000 95,800,000 Equity in income of Sierra Company (4,361,500) 01 Net income 131.361.500 (7950.000) Retained earnings, January 1, 20x1 Net income (above) Dividends paid Retained earnings, December 31, 20x1 (2,500,000) (31,361,500) 5,000,000 8.861.500 (100,000) (7,950,000) 3,000,000 15.050.000) 2 20,800,000 Current Assets Investment in Sierra Company Land Buildings Equipment (net) Total assets 30,500,000 13,161,500 1,500,000 5,600,000 3,100,000 53.861.500 1,700,000 2,360,000 2,960,000 27.820.000 (3,100,000) Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings, Dec 31, 20x1 (above) Total liabilities and stockholders' equity (2,900,000) (19,000,000) (28,861,500) 153.851.500) (4,900,000) (1,000,000) (6,000,000) (10,870,000) (5,050,000) [27.820.000) Required A. Prepare the journal entry to record Pullman's acquisition of Sierra Company. B. Prepare a schedule showing the determination of goodwill, if applicable, for this acquisition. C. Prepare a schedule showing the allocation of any related purchase price adjustments to the acquired company's assets, including the related annual amortizations, if applicable. D. For 12/31/20x1, prepare a consolidation worksheet for this transaction. Assume that no goodwill impairment adjustment is required. (For the format, consider the Exhibit 4.6 on page 167 & use Excel) Adjusting Consolidation Entries Non-controlling Entries Totals Pullman, Inc. (298,000,000) 271,000,000 14.361.500 3.1.361.500 Sierra Company (103,750,000) 95,800,000 Revenues Expenses Equity in income of Sierra Company Separate net income 17.050.00 Consoldiated net income Net income attributable to NCI Net income attributable to Pullman 2 .500.000il 131 361 5001 Retained earnings, January 1, 20x1 Net income (above) Dividends paid Retained earnings, December 31, 20x1 (100.000) (7,950.000il 3.000.000 15.050.000 5,000,000 201615.00 Current Assets 20.800.000 Investment in Sierra Company Land Buildings Equipment (net) Goodwill Total assets 30,500,000 13,161,500 1.500,000 5.600,000 3,100,000 1.700.000 2,360,000 2.960.000 52861.500 27 120.000 13,100.000il Accounts payable Notes payable Common stock Additional paid-in capital Noncontrolling interest in Sierra, 1/1/20x1 Noncontrolling interest in Sierra, 12/31/20x1 14,900,000) (1,000.000il 16,000.000il (10,870.00011 (2.900.000il (19,000,000) Retained earnings, Dec. 31, 20x1 (above) Total liabilities and stockholders' equity (28,861,500) 52961500 (5,050,000) 127.82000 Problem 2 Pullman, Inc. acquired a controlling interest in Sierra Company on 1/1/20x1. At that time, the book value of Sierra Company's net assets was $16,970,000, including the following: Buildings Equipment Land Hair Value Book Value $2,700,000 3,700,000 1,700,000 Beek Value Fair Value $3,400,000 3,300,000 2,550,000 2 Remaining Life 7 years 5 years Indefinite In acquiring their controlling interest, Pullman paid $10,450,000 cash in exchange for 55% of the outstanding voting common stock of Sierra. At the time of the acquisition, the fair value of 100% of Sierra's outstanding common stock was $19,000,000 Pullman did not pay a control premium to acquire their 55% controlling interest. Any consideration paid in excess of the fair value of net assets acquired is assigned to goodwill. + The account balances for Pullman, Inc. and Sierra Company at 12/31/20x1 are as follows: Pullman, Inc. Sierra Company Revenues (298,000,000) (103,750,000) Expenses 271,000,000 95,800,000 Equity in income of Sierra Company (4,361,500) 01 Net income 131.361.500 (7950.000) Retained earnings, January 1, 20x1 Net income (above) Dividends paid Retained earnings, December 31, 20x1 (2,500,000) (31,361,500) 5,000,000 8.861.500 (100,000) (7,950,000) 3,000,000 15.050.000) 2 20,800,000 Current Assets Investment in Sierra Company Land Buildings Equipment (net) Total assets 30,500,000 13,161,500 1,500,000 5,600,000 3,100,000 53.861.500 1,700,000 2,360,000 2,960,000 27.820.000 (3,100,000) Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings, Dec 31, 20x1 (above) Total liabilities and stockholders' equity (2,900,000) (19,000,000) (28,861,500) 153.851.500) (4,900,000) (1,000,000) (6,000,000) (10,870,000) (5,050,000) [27.820.000) Required A. Prepare the journal entry to record Pullman's acquisition of Sierra Company. B. Prepare a schedule showing the determination of goodwill, if applicable, for this acquisition. C. Prepare a schedule showing the allocation of any related purchase price adjustments to the acquired company's assets, including the related annual amortizations, if applicable. D. For 12/31/20x1, prepare a consolidation worksheet for this transaction. Assume that no goodwill impairment adjustment is required. (For the format, consider the Exhibit 4.6 on page 167 & use Excel) Adjusting Consolidation Entries Non-controlling Entries Totals Pullman, Inc. (298,000,000) 271,000,000 14.361.500 3.1.361.500 Sierra Company (103,750,000) 95,800,000 Revenues Expenses Equity in income of Sierra Company Separate net income 17.050.00 Consoldiated net income Net income attributable to NCI Net income attributable to Pullman 2 .500.000il 131 361 5001 Retained earnings, January 1, 20x1 Net income (above) Dividends paid Retained earnings, December 31, 20x1 (100.000) (7,950.000il 3.000.000 15.050.000 5,000,000 201615.00 Current Assets 20.800.000 Investment in Sierra Company Land Buildings Equipment (net) Goodwill Total assets 30,500,000 13,161,500 1.500,000 5.600,000 3,100,000 1.700.000 2,360,000 2.960.000 52861.500 27 120.000 13,100.000il Accounts payable Notes payable Common stock Additional paid-in capital Noncontrolling interest in Sierra, 1/1/20x1 Noncontrolling interest in Sierra, 12/31/20x1 14,900,000) (1,000.000il 16,000.000il (10,870.00011 (2.900.000il (19,000,000) Retained earnings, Dec. 31, 20x1 (above) Total liabilities and stockholders' equity (28,861,500) 52961500 (5,050,000) 127.82000