Question Student worksheet ect 310 Summer 2018 Homework assignment On January 1, 20X2, Polly Corp. acquired S0% of thw outstanding ormmon shares of Sam Inc for 1.200,000 cash Here re the statemens of fiancial position of both companies A January 1.20x2 Polly CorpSam Inc Cash nventory Accumulated deprecialtion nvestment in Sam 65,000 110,000 55,000 00,000 Accounts payable Noles payable Common shares Rctained carnings 200,000 60,000 40,000 150,000 Other information Sam had patents on the date of acquisition that were not shown en the SFP. These patents have an estimated fair vallue of $100,000 and an estimated remaining productive life of four ycars at thal time. The buildings and oquipment of Sam on the date of acquisition have an estimated fair valuc of $200,000 in cexcess of book valus. Sam's buildings and equip ent ane being amortized on the straight-ling basis and have remaining usefal life of 10 years as of the date of acquisition. Sam's notes payable had a fair value of $220,000 at acquisition date and mature on December 31,20XS. Al other assets and liabilities had a book value equal to their fair value at acquisition date During 20X2, dividends declarations amountod to $60,000 by Polly and $25,000 by Sam. Pally'snet income for 20X2 was $60,000 and Sams was S125,000 During 20x3, dividend declarations amounted to S80,000 by Polly and $50,000 by Sam. There were no ether intercompany transactions in 20X2 or 20x3 At the end of 20X2, a competitor offered to purchase Sam Although the proposed sale did not go throuph, the reviews undertaken as part of nepotiations indicated that goodwill was impaired in 20X2 in the amount of S40.000 n 2033, Sam lent Polly $150,000 for a term of five years. This note payablk was outstanding at December 31.2033 and imerest charged and paid by Pelly during the year relating to loan totalied $22,000. IGNORE DEFERRED INCOME TAXES (DITS) FOR THE PURPOSE OF THIS HOMEWORK ASSIGNMENT It is now the end of 20X3 and coesolidased finabcial statements must be peepared Using the tab titled "student worksheet" (which includes a partially completed sheet wih the 20x3 financial statements for both Polly and Sam), complese the follwing task a Analyze the purchase price by preparing a poodwill schedule Use the full fair value method for NCSHI b. Prepare all elimination entries necessary for Polly to consolidale Sam at December 3120x3 Ensure you show your work and caculations in the cells to the right of the entrics Complete the consolidated working paper for Polly The entries should each go on a separale line efthe worksheet in the Enancial statement arcas. This provides complete documemation of what you have done. Add nows if needed. For simplicity, only closing RE must be peepared therefore all entries that impact RE must be adjusted to closing RE on the SIT. even if they impact a current year income statement account Cotsolidaied earnings are ealculated as cossolidated revenue less expetoes. They are not ealculated by cress-adding Polly's cartings to Sam's earning Adding the figares across each ling of the consolidated worksheet is more complicated than you might expect, Make sure you include the debits and credits in the right direction eterest expense is incloded in other expemses Question Student worksheet ect 310 Summer 2018 Homework assignment On January 1, 20X2, Polly Corp. acquired S0% of thw outstanding ormmon shares of Sam Inc for 1.200,000 cash Here re the statemens of fiancial position of both companies A January 1.20x2 Polly CorpSam Inc Cash nventory Accumulated deprecialtion nvestment in Sam 65,000 110,000 55,000 00,000 Accounts payable Noles payable Common shares Rctained carnings 200,000 60,000 40,000 150,000 Other information Sam had patents on the date of acquisition that were not shown en the SFP. These patents have an estimated fair vallue of $100,000 and an estimated remaining productive life of four ycars at thal time. The buildings and oquipment of Sam on the date of acquisition have an estimated fair valuc of $200,000 in cexcess of book valus. Sam's buildings and equip ent ane being amortized on the straight-ling basis and have remaining usefal life of 10 years as of the date of acquisition. Sam's notes payable had a fair value of $220,000 at acquisition date and mature on December 31,20XS. Al other assets and liabilities had a book value equal to their fair value at acquisition date During 20X2, dividends declarations amountod to $60,000 by Polly and $25,000 by Sam. Pally'snet income for 20X2 was $60,000 and Sams was S125,000 During 20x3, dividend declarations amounted to S80,000 by Polly and $50,000 by Sam. There were no ether intercompany transactions in 20X2 or 20x3 At the end of 20X2, a competitor offered to purchase Sam Although the proposed sale did not go throuph, the reviews undertaken as part of nepotiations indicated that goodwill was impaired in 20X2 in the amount of S40.000 n 2033, Sam lent Polly $150,000 for a term of five years. This note payablk was outstanding at December 31.2033 and imerest charged and paid by Pelly during the year relating to loan totalied $22,000. IGNORE DEFERRED INCOME TAXES (DITS) FOR THE PURPOSE OF THIS HOMEWORK ASSIGNMENT It is now the end of 20X3 and coesolidased finabcial statements must be peepared Using the tab titled "student worksheet" (which includes a partially completed sheet wih the 20x3 financial statements for both Polly and Sam), complese the follwing task a Analyze the purchase price by preparing a poodwill schedule Use the full fair value method for NCSHI b. Prepare all elimination entries necessary for Polly to consolidale Sam at December 3120x3 Ensure you show your work and caculations in the cells to the right of the entrics Complete the consolidated working paper for Polly The entries should each go on a separale line efthe worksheet in the Enancial statement arcas. This provides complete documemation of what you have done. Add nows if needed. For simplicity, only closing RE must be peepared therefore all entries that impact RE must be adjusted to closing RE on the SIT. even if they impact a current year income statement account Cotsolidaied earnings are ealculated as cossolidated revenue less expetoes. They are not ealculated by cress-adding Polly's cartings to Sam's earning Adding the figares across each ling of the consolidated worksheet is more complicated than you might expect, Make sure you include the debits and credits in the right direction eterest expense is incloded in other expemses