Question
State Corporation's balance sheet at January 1, 20X7, reflected the following balances: Assets Liabilities & Stockholders' Equity Cash & Receivables$80,000Accounts Payable$40,000Inventory120,000Income Taxes Payable60,000Land70,000Bonds Payable200,000Buildings &
State Corporation's balance sheet at January 1, 20X7, reflected the following balances:
AssetsLiabilities & Stockholders' EquityCash & Receivables$80,000Accounts Payable$40,000Inventory120,000Income Taxes Payable60,000Land70,000Bonds Payable200,000Buildings & Equipment (net)480,000Common Stock250,000Retained Earnings200,000Total Assets$750,000Total Liabilities & Stockholders' Equity$750,000
Praise Corporation entered into an active acquisition program and acquired 80 percent of State's common stock on January 1, 20X7, for $470,000. The $470,000 was normal market value for the shares purchased (there was no control premium.)
- A careful review of the fair value of State's assets and liabilities indicated that the land had a fair value of $120,000 on1/1/20X7.
- The fair valuesof the other identifiable assets and liabilities were estimated to equal their book values.
Immediately before the acquisition, Praise had the followingselectbalances:
Land:$95,000
Goodwill:none
Retained earnings: $288,000
Type ONLY yournumeric final answer in each box.Youcan use commas but do not use any other punctuation.
1.How much goodwill resulted from this acquisition?
2.What will Praise record as Investment in State on its separate financial statements on the 1/1/20X7?
The following questionsrelate to balance sheet accounts in theconsolidatedfinancialstatementsthat are prepared on the dateof acquisition.
3. What is the balance in the Land account?
4. What is the balance in the Goodwill account?
5. What is the balance in the Retained earnings account?
6. What is the balance in the Investment in State account?
7. What is the balance in the Noncontrollinginterest account (in the equity section)?
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