1. What is the goodwill at the acquisition date?

2. What is the ECOBV amortization?

3. What is the consolidated total of non-controlling interest appearing on the balance sheet?

4. Prepare the consolidation journal entries

Transcribed image text: Problem 1 Hoyle, Schaefer and Doupnik Chapter 5 Modified Problems 11-16 - I use Equity method instead of Initial Value method On January 1, Jarel acquired 80% of the outstanding voting stocks of Suarez for $260,000 cash consideration. The remaining 20% of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (5-year life) that was undervalued on its book by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded in Suarez's financial records, were estimated to have a 20-year future life. As of December 31, the financial statements appeared as follows: Jarel Suarez Revenues (300,000) (200,000) Cost of Goods Sold 140,000 80,000 Expenses 20,000 10,000 Equity in Investee Income (70,000) Net Income (210,000) (110,000) Retained Earnings, 1/1 (300,000) (150,000) Net Income (210,000) (110,000) Dividend Paid 0 0 Retained Earnings, 12/31 (510,000) (260,000) Cash and receivables 210,000 90,000 Inventory 150,000 110,000 Investment in Suarez 330,000 Equipment (net) 440,000 300,000 Total Assets 1,130,000 500,000 Liabilities (420,000) (140,000) Common Stock (200,000) (100,000) Retained Earnings 12/31 (510,000) (260,000) Total Liabilities and Equity (1,130,000) (500,000) During the year, Jarel bought inventory for $80,000 and sold it to Suarez for $100,000. Of these goods, Suarez still owns 60% on December 31. Transcribed image text: Problem 1 Hoyle, Schaefer and Doupnik Chapter 5 Modified Problems 11-16 - I use Equity method instead of Initial Value method On January 1, Jarel acquired 80% of the outstanding voting stocks of Suarez for $260,000 cash consideration. The remaining 20% of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (5-year life) that was undervalued on its book by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded in Suarez's financial records, were estimated to have a 20-year future life. As of December 31, the financial statements appeared as follows: Jarel Suarez Revenues (300,000) (200,000) Cost of Goods Sold 140,000 80,000 Expenses 20,000 10,000 Equity in Investee Income (70,000) Net Income (210,000) (110,000) Retained Earnings, 1/1 (300,000) (150,000) Net Income (210,000) (110,000) Dividend Paid 0 0 Retained Earnings, 12/31 (510,000) (260,000) Cash and receivables 210,000 90,000 Inventory 150,000 110,000 Investment in Suarez 330,000 Equipment (net) 440,000 300,000 Total Assets 1,130,000 500,000 Liabilities (420,000) (140,000) Common Stock (200,000) (100,000) Retained Earnings 12/31 (510,000) (260,000) Total Liabilities and Equity (1,130,000) (500,000) During the year, Jarel bought inventory for $80,000 and sold it to Suarez for $100,000. Of these goods, Suarez still owns 60% on December 31

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Lets address each question stepbystep 1 What is the goodwill at the acquisition date Goodwill is calculated as the excess of the purchase consideration over the fair value of net identifiable assets a... View the full answer