question archive On January 1, 2011, Pinnead Incorporated paid $299,895 for an 78% interest in Shalle Company
On January 1, 2011, Pinnead Incorporated paid $299,895 for an 78% interest in Shalle Company
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On January 1, 2011, Pinnead Incorporated paid $299,895 for an 78% interest in Shalle Company. .1 At that time, Shalle's total book value was $299,000. Patents were undervalued in the amount of $10,000. Patents had a 3-year remaining useful life, and any remaining excess value was attributed to goodwill. The income statements for the year ended December 31, 2011 of Pinnead and Shalle are summarized below Use The Implied Methods for this as please Shalle Pinnead $300,000 $800,000 Sales 78,400 Income from Shalle (100,000) (100,000) Cost of sales (30.000) (70.000) Depreciation (70,000) (130,000) Other Expenses $100,000 $578,400 Net Income
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1.
| Pinnead paid to acquire 78% of Shalle | $299,895 |
| Implied fair value of Shalle (299,895 / 78%) | $384,481 |
| Book value of Shalle | $299,000 |
| Excess fair value of book value of Shalle | $85,481 |
| Allocation of excess fair value over book value: | |
| Patent | $10,000 |
| Goodwill | $75,481 |
| Total excess fair value over book value allocated | $85,481 |
Consolidated Goodwill = $75,481
2.
| Pinned separate net income (578,400 - 78,400) | $500,000 |
| Shalle separate net income | $100,000 |
| Amortization of patent ($10,000/3 years) | ($3,333) |
| Consolidated Net Income | $596,667 |
3.
| Shalle separate net income | $100,000 |
| Amortization of excess value ($10,000/3) | $3,333 |
| Adjusted net income | $96,667 |
| Non controlling ownership | 22% |
| Non controlling interest share | $21,667 |
