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"Father, inc. buys 80 percent of the outstanding c...

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"Father, inc. buys 80 percent of the outstanding common stock of sam corporation on January 1, 2009 for $680000 cash. at the acquisition date, sam's total fair value was assessed at $850,000 although sam's book vale was only $600,000. " Also, several individual items on sam's financial records had fair values that differed from their book values as follows: land: book value $60,000. Fair value $225,000 building and equipment (10 year remaining life) book value %275,000. Fair value $250,000. copy right (20 year life) $100,000. fair value $200,000. notes payable (due in 8 years) book value ($130,000). fair value ($120,000). for internal reporting purposes, father, inc employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2009, for both companies. Using the acquisition method, determine consolidated balances for this business combination (through either individual computations or the use of a worksheet). Revenues: father $(1,360,000) sam (120,000) Cost of goods sold: Father 700,000 sam 385,000 depreciation expense: father 260,000 sam 10,000 amortization expense: Father -0- sam 5,000 interest expense: father 44,000 sam 5,000 equity in income of sam: father (105,000) sam -0- Net Income: father (461,000) sam (135,000) Retained earning 1/1/2009 father 1,265,000 sam 440,000 Net income (above) father (461,000) sam (135,000) dividends paid: father 260,000 sam 65,000 retained earning 12/31/2009 father (1,466,000) sam (510,000) current assets: father 965,000 sam 528,000 investment in sam: father 733,000 sam -0- land: father 292,000 sam 60,000 building and equipment: father 877,000 sam 265,000 copyright: father -0- sam 95,000 total assets: father 2,867,000 sam 948,000 accounts payable: father (191,000) sam (148,000) notes payable: father (460,000) sam (130,000) common stock: father (300,000) sam (100,000) additional paid in capital: father (450,000) (60,000) retained earning (above): father (1,466,000) sam (510,000) total liabilities and equities: father 2,867,000 sam 948,000 "

 

Paper#2901 | Written in 18-Jul-2015

Price : $25
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