counting question lcheg Chapter 3-Homework X1+ https://newconnect.mheducation.co

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counting question lcheg Chapter 3-Homework X1+ https://newconnect.mheducation.com/flow/connect html Problem 3-34 (LO 3-30, 3-3b, 3-7) Eranson paid $607.500 cash for alilof the outstanding common stock of Wolpeck, mc. on January 1 2017. on that date, the had a book value of $373.000 (common stock of $200,000 and retairned earnings of $173.000, although various unrecorded royaity agreements (10-year remaining ife) were assessed at a $199.000 fair value. Any remaining excess fair velue was considered goodwil. In negotiating the acquisition price. Branson also promised to income exceeded $150,000 total over the first two years after the acquisition. At the probability-adjusted present value of to date, Branson increased the value of the contingency to $36,000 During the subsequent two years, Wolfpack reported the following amounts for income and dividends lso promised to pay Wolfpack's former owners an additional $45,000 if Wolfpack's aoquisition date, Branson estimated the this contingent consideration at $31500. On December 31, 2017, based on Wolfpack's earnings Net Incone Dividends Declared 2817 $88,5e0 2818 9e,see $25,003 5,008 In keeping with the original acquisition agreement on December 31, 2018, Branson paid the additional $45 000 performance fee to Wolfpack's prewious owners Prepare eech of the toilowing a. Bransons entry to record the acquisition of the shares of its Wolfpack subsidiary b. Branson's entries at the end of 2017 and 20to adjust its contingent performance obligation for changes in fair value and the c. Prepere consolidation worksheet entries as of December 31, 2018, assuming that Branson has applied the equity method d. Prepare consolidetion worksheet entries as of December 31, 2018, assuming that Branson has applied the intial value metod Complete this question by entering your answvers in the tabs below. Required A Ruired Kequred C Required tiranson s entry to record the acquisition of the shares of its wolfpack subsidary, (tF no entry is requied or t, select No journal entry required in the first apcount field) General Journal

Explanation / Answer

Date Account Debit Credit .January 1,2017 Investment in Wolfpack $639,000    To Contingent performance obligation $31,500    To Cash $607,500 .December 31,2017 Loss from increase to contingent consideration $4,500    To Contingent performance obligation $4,500 ($ 36000-$31500) .December 31,2017 Loss from increase to contingent consideration $9,000 ($45000-$36000)    To Contingent performance obligation $9,000 .December 31,2017 Contingent earn-out $45,000    To Cash $45,000 Equity Method Common Stock Wolfpack $200,000 Retained Earnings $228,500 ($173,000+80,500-25,000)          To Investment in Wolfpack $428,500 Royalty Agreement $179,100 ($199,000*9/10) Goodwill $67,000 ($639,000-$199,000-$373,000)          To Investment in Wolfpack $246,100 Equity Earnings in Wolfpack $80,500          To Investment in Wolfpack $80,500 Equity Earnings in Wolfpack $35,000 To Dividend Paid $35,000 Amortization $19,900 ( $199,000/10) To Royalty Agreement $19,900 Intial value Method Investment in Wolfpack $35,600    To Retained Earnings $35,600 Common Stock Wolfpack $200,000 Retained Earnings $228,500          To Investment in Wolfpack $428,500 Royalty Agreement $179,100 Goodwill $67,000          To Investment in Wolfpack $246,100 Dividend Income $35,000 To Dividend Paid $35,000 Amortization $19,900 To Royalty Agreement $19,900

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