Vlue and FMW of liablities. Assuming that ermine the following cutoff amounts po
ID: 2554737 • Letter: V
Question
Vlue and FMW of liablities. Assuming that ermine the following cutoff amounts points per correct answer; 5 points for formatting burchase price below which Wood would obtain a "barga purchase price at which Wood would record $75000 price above which Wood would r price at which Wood would record a $50,000 ga. d. The of goodwill 2.5. On January 1, 2013, Prima C in exchange for all 2,000 outstanding common shares o amounted to $1,700 paid in cash. Just prior to the acquisition swat Company in a purchase transaction. Registration costs Balance Sheets of the two companies were as follows: ts $20 par value common shares with a Fair Value of $50 per shar Cash Accounts Receivable (net) Inventory Plant and Equipment (net) Land $73,000 95,000 58,000 $13,000 19,000 25,000 43,000 Total Assets $347000 $120,000-37- Accounts Payable Notes Payable Common Stock, $20 par value Other Contributed Capital Retained Earnings 66,000 82,000 100,000 60,000 $347,000 16,000 21,000 37 24,000 Total Liabilities and Equities $120,000 Any differences between the Book Value of equity and the FMV implied by the purchase price relates to Land: (10 points per correct answer (all or nothing); 5 points per section for formatting: 45 points total) a. Prepare the journal entry on Prima's books to record the exchange of stock b. Prepare a CAD Schedule for the Difference between book value and value implied by the purchase price c. Calculate the consolidated balance for each of the following accounts as of December 31, 2013: 1. Cash 2. Land 3. Common Stock 4. Other Contributed CapitalExplanation / Answer
PART-1)
Debit
Credit
Investment in Swatch Company ($50 * $1500)
75,000
Common Stock ($20 par value * 1,500)
30,000
Other Contributed Capital
45,000
Other Contributed Capital
1,700
Cash
1,700
PART-2)
Parent Share
Noncontrolling Share
Total Value
Purchase price and impiled value
75,000
0
75,000
Minus: Book value of equity acquired:
Common stock
40,000
0
40,000
Other contributed capital
24,000
0
24,000
Retained earnings
19,000
0
19,000
Total book value
83,000
0
83,000
Difference between implied and book value
-8,000
0
-8,000
Land revaluated value
8,000
0
8,000
Balance
0
0
0
PART-3)
Prima Company
Swatch Company
Eliminations
Consolidated
Cash
Debit
Credit
Balances
Land
73,000
13,000
1,700
84,300
Common Stock
26,000
20,000
8,000
54,000
Other Contributed Capital
100,000
30,000
130,000
60,000
45,000
1,700
103,300
Debit
Credit
Investment in Swatch Company ($50 * $1500)
75,000
Common Stock ($20 par value * 1,500)
30,000
Other Contributed Capital
45,000
Other Contributed Capital
1,700
Cash
1,700
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