Answer A,B and C Answer A,B and C S 270,000 : on 12/31/2xx1 ClassCo buys 25% of
ID: 2338574 • Letter: A
Question
Answer A,B and C
Answer A,B and C
S 270,000 : on 12/31/2xx1 ClassCo buys 25% of StudentCo for : StudentCo. BS Brief Assets 21,70,000 Liabilities S 18,00,000 Equity S 3,70,000 During ClassCo review of StudentCo, it was determined certain assets were either on StudentCo BS below fair value or that the assets were not on BS at all, to wit StudentCo BS value Fair Value Life S 5,00,000 S 5,65,000 PPE Patents Trademarks S S 2,35,000 S 75,000 indefinite 10 During year after acquisition StudentCo had: paid dividends to all shareholders the total of: S 40,000 Recorded net Income of: S 1,04,000 TO do: A Schedule of values attributable to ClassCo investment including in excess of book value [BVI totalling to amount paid for in'estment Based upon fact set above Prepare Journal Entries in year after acquisition including at that YE of StudentCo activities&any Deprec. Or amortization on 12/31/2xx1 B Complete schedule below AND for YE 2xx2 for YE 2xx2
Explanation / Answer
Answer 1
Book value of class Co
370000
Class Co%
25%
Book value for 25% (370000*25%)
92500
Amount paid for acquired 25% share in student Co.
270000
Less: book value for 25%
-92500
Class Company amount excess of book value
177500
Student Co book value
Fair value
Life
Excess Attributed to Class Co ((fair value - book value)*25)
Amortization / depreciation Class Co. Per year (Excess Attributed to Class Co /life of asset)
PPE
500000
565000
5
16250
3250
Patents
240000
10
60000
6000
Trademarks
75000
Indefinite
18750
Not Applicable
Total attribute to class CO before goodwill
95000
Goodwill attribute to Class Co. (177500-95000)
82500
Book value Class Co.
92500
Total
270000
Answer 2
Journal entries
Date
Account title
Debit
Credit
31-Dec-11
Investment in student Co.
270000
Cash
270000
(To acquired 25% share in student Co.)
31-Dec-12
Investment in student Co.
26000
Income share from student Co.
26000
(To record share in net income of student co.)
31-Dec-12
Cash
10000
Investment in student Co.
10000
(To record dividend received.)
31-Dec-12
Amortization and Depreciation expense
9250
Investment in student Co.
9250
(To amortization of excess of fair value during the year)
Answer 3
Class CO.
Investment beginning
270000
Less: Dividend from student Co. (40000*25%)
10000
Income share from student Co. (104000*25%)
26000
286000
Less: Amortization @ class Co of student Co
PPE
3250
Patents
6000
9250
Sum Adjustment
Investment Balance for Student CO
276750
Book value of class Co
370000
Class Co%
25%
Book value for 25% (370000*25%)
92500
Amount paid for acquired 25% share in student Co.
270000
Less: book value for 25%
-92500
Class Company amount excess of book value
177500
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