3) On January 1, 2013, Pendal Corporation purchased 25% of the outstanding common stock of Sedda Corporationfor $100,000 cash. Book value and fair value of Sedda's assets and liabilities at the time of acquisition are shownbelow.AssetsBookFairValues$40,000Values$40,000CashAccounts receivable100,00090,00050,000210,000$390,000Inventories40,000Equipment180,000$360,000Liabilities & EquitiesAccounts payableNote payableCapital stockRetained earnings$110,000$110,00050,00040,000100,000100,000$360,000$150,000Required:Prepare an allocation schedule for Pendal's investment in Sedda.

Computation of excess cost over book value acquired: Amount Investment cost $100,000…

3) On January 1, 2013, Pendal Corporation purchased 25% of the outstanding common stock of Sedda Corporation for $100,000 cash. Book value and fair value of Sedda's assets and liabilities at the time of acquisition are shown below. Assets Book Fair Values $40,000 100,000 Values $40,000 90,000 Cash Accounts receivable 50,000 210,000 $390,000 Inventories 40,000 Equipment 180,000 $360,000 Liabilities & Equities Accounts payable Note payable Capital stock Retained earnings $110,000 $110,000 50,000 40,000 100,000 100,000 $360,000 $150,000 Required: Prepare an allocation schedule for Pendal's investment in Sedda.

3) On January 1, 2013, Pendal Corporation purchased 25% of the outstanding common stock of Sedda Corporation for $100,000 cash. Book value and fair value of Sedda's assets and liabilities at the time of acquisition are shown below. Assets Book Fair Values $40,000 100,000 Values $40,000 90,000 Cash Accounts receivable 50,000 210,000 $390,000 Inventories 40,000 Equipment 180,000 $360,000 Liabilities & Equities Accounts payable Note payable Capital stock Retained earnings $110,000 $110,000 50,000 40,000 100,000 100,000 $360,000 $150,000 Required: Prepare an allocation schedule for Pendal's investment in Sedda.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 55RSCQ

See similar textbooks

Related questions

Q: On January 1, 2014, Punch Corporation purchased 100% of the common stock of Soopy Co. Separate…

A: Consolidated balance sheet refers to the combined balance sheet of the holding and subsidiary…

Q: a. Prepare a schedule calculating the goodwill to be recognized for this acquisition. Acquisition…

A: Goodwill is the excess amount paid over the fair value (FV) of the net assets of the entity. It is…

Q: Prepare the working paper eliminating entries for 2016 for the purpose of preparing consolidated…

A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…

Q: Following are financial statements for Moore Company and Kirby Company for 2018:• Moore purchased 90…

A: Work Sheet: It is a tool to prepare accounting information and reports. It is an internal…

Q: On January 1, 2022, Sun Company acquired 85% of outstanding shares of Moon Corp. The consideration…

A: Consolidation - Legally speaking, consolidation refers to the merging of two or more enterprises,…

Q: On July 1, 2018, Gupta Corporation bought 25% of the outstanding common stock of VB Company for $100…

A: 1. Prepare necessary journal entries for the given transactions. Working note 3:

Q: On January 1, 2025, Henderson Company purchased 100% of the common stock of Caramel Company for…

A: Investment in Associates and Joint venture and Subsidiary Equity Accounting method - This method is…

Q: Giant acquired all of Small’s common stock on January 1, 2017, in exchange for cash of $770,000. On…

A: Consolidation refers to the acquisition of many small companies by one large company by obtaining…

Q: On April 1, 2024, BigBen Company acquired 35% of the shares of LittleTick, Incorporated BigBen paid…

A: net income refers to an amount that is being earned by the investors over the amount of investment…

Q: On January 1, 2016, Uncle Company purchased 80 percent of Nephew Company’s capital stock for…

Q: What amount of the investment cost is attributable to goodwill?

A: Given information is: On January 2, 2020, Kent Corp. paid 1,600,000 for the purchase of 40% of the…

Q: On January 1, 2025, Henderson Company purchased 100% of the common stock of Caramel Company for…

A: At the time of preparing consolidated financial statements, the individual balances of the holding…

Q: On January 1, 2016, Uncle Company purchased 80 percent of Nephew Company's capital stock for…

A: Dividend refers to the percentage of earning shared by a company or organization to its…

Q: On January 1, 2022, Cullumber Corp. bought 31,000 shares of the available 100,000 common shares of…

A: Investment means an asset purchased in expectation of earning a return on such investment in future…

Q: On January 1, 2018, Johnsonville Enterprises, Inc., acquired 80 percent of Stayer Company’s…

A: Net income: Net income is the excess amount of revenue after deducting all the expenses of a…

Q: On January 3, 2018, Matteson Corporation acquired 40 percent of the outstanding common stock of…

A: Equity method: Equity method is the method used for accounting equity investments which claim a…

Q: . How much goodwill will Elf Hotels record on the acquisition?

Q: Arizona Corporation acquired the business Data Systems for $320,000 cash and assumed all liabilities…

A: Goodwill :- Goodwill means reputation, image, credit, value & Demand of the Company in the…

Q: On September 1, 2017, Winans Corporation acquired Aumont Enterprises for a cash payment of $700,000,…

A: Solution: Introduction: Goodwill is an intangible asset that will arise when one company purchases…

Q: On April 1, 2024, BigBen Company acquired 30% of the shares of LittleTick, Incorporated BigBen paid…

A: Big Ben acquired 30% shares of Little Tick on 1 April, 2024 and hence Big Ben entitled to receive…

Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

3) On January 1, 2013, Pendal Corporation purchased 25% of the outstanding common stock of Sedda Corporation
for $100,000 cash. Book value and fair value of Sedda's assets and liabilities at the time of acquisition are shown
below.
Assets
Book
Fair
Values
$40,000
Values
$40,000
Cash
Accounts receivable
100,000
90,000
50,000
210,000
$390,000
Inventories
40,000
Equipment
180,000
$360,000
Liabilities & Equities
Accounts payable
Note payable
Capital stock
Retained earnings
$110,000
$110,000
50,000
40,000
100,000
100,000
$360,000
$150,000
Required:
Prepare an allocation schedule for Pendal's investment in Sedda.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On July 1, 2022 the ABC Company acquired the net assets of XYZ Company for P8,000,000. The recorded assets and liabilities of XYZ Corporation on July 1, 2022, immediately before the acquisition are as follows: Cash P 800,000 Inventory 2,400,000 Property and equipment, net 4,800,000 Liabilities 1,800,000 On July 1, 2022 it was determined that the inventory of XYZ had a fair value of P1,900,000, and the property and equipment, net had a fair value of P5,600,000. What is the amount of goodwill (gain on bargain purchase) that will be reported in the books of ABC?
Peer, Inc. acquires 75 percent of Sea-breeze Corporation for P600,000 cash on January 1, 2016. The remaining percent of the Sea-breeze shares traded near a total value of 200,000 both before and after the acquisition date. NCI is measured on a full basis .On January 1, 2016, Sea-breeze had the following assets and liabilities: Book Value Fair Value Current Assets P 250,000 P 250,000 Land 100,000 100,000 Building (net) – 5-year-year life 400,000 350,000 Equipment (net) – 8-year life 300,000 400,000 Patent (10-year life) -0- 50,000 Accounts Payable (200,000) (200,000) Bonds Payable – 5-years (150,000) (175,000) Net P 700,000 P 775,000 Common Stock P 650,000 Retained Earnings P 50,000 The companies’ financial statements for the year ending December 31, 2016 using cost method are as follows: Peer Sea-Breeze Revenue P (800,000) P (250,000) Operating expenses…
On January 1, 2024, Flower Company purchased 100% of the common stock of Cornell Company for $380,000 cash. Fair values differed from book values as follows: Fair value Inventory $45,000 Land 50,000 Buildings 200,000 Bonds Payable 95,000 The trial balances of the companies at the acquisition date are as follows: Trial Balance Parent Sub. Account Titles Company Company Assets: Inventory 150,000 30,000 Cash 639,000 165,000 Investment in Sub. Company 380,000 Land 20,000 30,000 Buildings, net 250,000 180,000 Goodwill 40,000 Liabilities and Equity: Current Liabilities 191,000 65,000 Bonds Payable 500,000 100,000 Common Stock 100,000 50,000 Other Paid-in Capital 150,000 70,000 Retained Earnings 538,000 120,000 Which of the following is not one of the eliminations and adjustments included on the consolidation worksheet…
Pritano Company acquired all the net assets of Succo Company on December 31, 2013, for $2,145,600 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: Book value Fair value Current assets $ 995,110 $995,110 Plant and equipment 979,390 1,375,740 Total $1,974,500 $2,370,850 Liabilities $187,040 $235,560 Common stock 524,720 Other contributed capital 588,400 Retained earnings 674,340 Total $1,974,500 As part of the negotiations, Pritano Company agreed to issue 9,230 additional shares of its $10 par value common stock to the stockholders of Succo if the average postcombination earnings over the next three years equaled or exceeded $2,481,300. The fair value of the contingent consideration on the date of acquisition was estimated to be $219,700. The contingent consideration (earnout) was classified as equity rather than as a liability.…
Pritano Company acquired all the net assets of Succo Company on December 31, 2013, for $2,234,440 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: Book value Fair value Current assets $ 962,320 $962,320 Plant and equipment 1,186,440 1,337,450 Total $2,148,760 $2,299,770 Liabilities $191,390 $214,050 Common stock 471,160 Other contributed capital 584,100 Retained earnings 902,110 Total $2,148,760 As part of the negotiations, Pritano agreed to pay the stockholders of Succo $385,210 cash if the post-combination earnings of Pritano averaged $2,234,440 or more per year over the next two years. The estimated fair value of the contingent consideration was $148,740 on the date of the acquisition. (a) Prepare the journal entry on the books of Pritano to record the acquisition on December 31, 2013. (If no entry is required, select…
9 On January 1, 2017, Sparky Co. acquired 80% of the outstanding stock of Panda Co. for P225,000 cash. Relevant information for Panda Co. on this date is as follows: Inventory 120,000 Land 240,000 Goodwill 10,000 Liabilities 30,000 Common Stock, P100 par 240,000 Retained earnings 100,000 At acquisition date, the book values of Panda Co.’s net identifiable assets and liabilities approximated their fair values. What amount shall be assigned to the minority interest on January 1, 2017? Group of answer choices 66,000 Cannot be determined 56,250 68,000
On January 1, 2015 P company acquired 80% interest in S Company for P2,000,000 cash. The stockholders' equity of S at the time of acquisition is P 1,875,000. On January 1, 2015, NCI is measured at its implied fair value. The excess of cost over book value of interest acquired is allocated to the following assets: Inventories: 100,000 (sold in 2013) Building: 200,000 (5-year remaining life) During 2015, S company reported total comprehensive income of 500,000 and paid dividends of P 100,000. What is the fair value of NCI on January 1, 2015? A. 500,000 B. 375,000 C. 525,000 D. 400,000
On March 31, 2016, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,000,000 in cash. The book values and fair values of Barney's assets and liabilities were as follows: Fair Value Book Value $ 6,000,000 $ 7,500,000 Current assets Property, plant, and equipment Other assets Current liabilities 11,000,000 1,000,000 4,000,000 6,000,000 14,000,000 1,500,000 4,000,000 5,500,000 Long-term liabilities Required: Calculate the amount paid for goodwill.
On May 31, 2018, Armstrong Company paid $3,500,000 to acquire all of the common stock of Hall Corporation, which became a division of Armstrong. Hall reported the following balance sheet at the time of the acquisition: Current assets $ 900,000 Current liabilities $ 600,000 Noncurrent assets 2,700,000 Long-term liabilities 500,000 Stockholders' equity 2,500,000 Total liabilities and Total assets $3,600,000 stockholders' equity $3,600,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Hall was $3,100,000. At December 31, 2018, Hall reports the following balance sheet information: Current assets $ 800,000 Noncurrent assets (including goodwill recognized in purchase) 2,600,000 Current liabilities (700,000) Long-term liabilities (500,000) Net assets $2,200,000 It is determined that the fair value of the Hall division is $2,300,000. Instructions (a) Compute the amount of goodwill recognized, if any, on May 31, 2018. (b) Determine the…
On May 31, 2018, Armstrong Company paid $3,500,000 to acquire all of the common stock of Hall Corporation, which became a division of Armstrong. Hall reported the following balance sheet at the time of the acquisition: Current assets $ 900,000 Current liabilities $ 600,000 Noncurrent assets 2,700,000 Long-term liabilities 500,000 Stockholders’ equity 2,500,000 Total liabilities and Total assets $3,600,000 stockholders’ equity $3,600,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Hall was $3,100,000. At December 31, 2018, Hall reports the following…
On March 31, 2024, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,500,000 in cash. The book values and fair values of Barney’s assets and liabilities were as follows: Book Value Fair Value Current assets $ 6,500,000 $ 8,000,000 Property, plant, and equipment 11,500,000 14,500,000 Other assets 1,050,000 1,550,000 Current liabilities 4,500,000 4,500,000 Long-term liabilities 6,500,000 6,000,000 Required: Calculate the amount paid for goodwill.
Use the following information for questions 1 to 4: On December 31, 2014, Add-On Company acquired 100 percent of Venus Corporation's common stock for P300,000. Balance sheet information Venus just prior to the acquisition is given here: Cash and receivables. P 35,000 Inventory.. Land.. 75,000 100,000 Buildings and equipment (net).. 220.000 Total assets. 420,000 Liabilities and Stockholder's Equity Accounts payable. Bonds payable. Common stock (P1 par). P 65,000 150,000 100,000 Retained earnings.. 115,000 Total liabilities and equity.. 430,000 At the date of the business combination. Venus's net assets and liabilities approximated fair value except for inventory, which had a fair value of P60,000, land which had a fair value of P125,000, and buildings and equipment (net), which had a fair value of P250,000. 1. What amount of inventory will be included in the consolidated balance sheet immediately following the acquisition? а. Р15,000 C. P60,000 b. P45,000 2. What amount of goodwill will…