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Question 2: Paster Corporation was seeking to expand its customer base, and wanted to acquire a company in a market area it had not yet
Question 2: Paster Corporation was seeking to expand its customer base, and wanted to acquire a company in a market area it had not yet served. Paster determined that the Semma Company was already in the market they were pursuing and on January 1, 2013, purchased a 25% interest in Semma to assure access to Semma's customer base. Paster paid $800,000, at a time when the book value of Semma's net equity was $3,000,000. Semma's book values equaled their fair values except for the following items: Fair Inventories Land Building-net Equipment.net Book Yalue $150,000 100,000 200,000 260,000 Value $200,000 80,000 210,000 310,000 Required: 1- Prepare a schedule to allocate any excess purchase cost to identifiable assets and goodwill 2- If Semma reported net income by $600,000 and dividend payment by $120,000. What is the value of investment in Semma that Paster Corporation has to report in its balance sheet as December 31, 2013
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