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Question 1 On January 1, 2011, john doe enterpris...




Question 1 On January 1, 2011, john doe enterprises (JDE) acquired a 55% interest in bubba manufacturing inc.(BMI). JDE paid for the transaction with $7 million cash and 500,000 shares of JDE common stock (no par value, market value : $14.90 per share). At the time of the acquisition, BMI?s book value (stockholder?s equity) was $16970,000. Differences between book value and fair value for BMI on January 1, 2011 are indicated below: Book Value Fair Value Land 1700,000 2550,000 Buildings (7 year remaining life) 2700,000 3400,000 Equipment (5 year remaining life) 3700,000 3300,000 JDE employs the equity method to account for this investment Record the journal entry for the combination on January 1, 2011. Show your calculations for goodwill and minority interest at acquisition and the amortization and allocation amounts of book value ? fair value differences that will be included at year end. Question 2 Assume that JDE sold inventory to BMI at a markup equal to 25% of cost. Transfers were $165,000. Of this inventory, $55,000 was on hand at the end of 2011. Required: for the consolidated financial statements, determine the balances that would appear for the following accounts: 1) sales, 2) cost of goods sold, 3) minority interest expense and 4) inventory JDI BMI elimination consolidation Sales 297,958,000 108,937,500 Less: cost of goods sold (81,300,000) (30,177,000) -minority interest Expense Inventory 15,250,000 10,400,000


Paper#9394 | Written in 18-Jul-2015

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