I
Subject:BusinessPrice: Bought3
I. The Investor acquired 75% of Investee on January 1, 2019 for $103,500. At acquisition the fair value of the noncontrolling interest was $34,500. Trial Balances for the two entities at December 31, 2019 are:
Investor Investee
Debit
Credit
Debit
Credit
Cash
68,500
32,000
Accounts Receivable
85,000
14,000
Inventory
97,000
24,000
Land
42,875
25,000
Buildings & Equipment
350,000
150,000
Investment in Subsidary
114,000
Cost of Goods Sold
145,000
114,000
Wage Expense
35,000
20,000
Depreciation Expense
25,000
10,000
Interest Expense
12,000
4,000
Other Expense
23,000
16,000
Dividends Declared
30,000
20,000
Accumulated Depreciation
170,000
50,000
Accounts Payable
51,000
15,000
Wages Payable
14,000
6,000
Notes Payable
150,000
50,000
Common Stock
200,000
60,000
Retained Earnings
126,875
48,000
Sales
290,000
200,000
Income from Subsidary
25,500
Total
1,027,375
1,027,375
429,000
429,000
The book value of the Investee's assets are equal to the fair value except for
Building & Equipment which are worth $20,000 more. Building and Equipment have 10 years of remaining life at time of acquisition.
Required:
1. Allocation of Acquisition Value
2. Equity entries for 2019.
3. Worksheet entries for the 2019 year end consolidation.
