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
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Transcribed Image Text: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.
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