On January 1, 2021, Morey, Inc., exchanged $176,425 for 25 percent of Amsterdam Corporation. Morey appropriately applied theequity method to this investment. At January 1, the book values of Amsterdam's assets and liabilities approximated their fair valuesOn June 30, 2021, Morey paid $626,500 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam's total fair value. At June 30, the carryingamounts of Amsterdam's assets and liabilities approximated their fair values. Any remaining excess fair value was attributed togoodwillAmsterdam reports the following amounts at December 31, 2021 (credit balances shown in parentheses);RevenuesExpensesRetained earnings, January 11Dividends declared, October 1Common stockAmsterdam's revenue and expenses were distributed evenly throughout the year, and no changes in Amsterdam's stock haveoccurreda. Using the acquisition method, calculate the acquisition-date fair value of Amsterdam to be included in Morey's June 30consolidated financial statements.$ (313,000)218,000(275,100)20,000(500,000)b. Using the acquisition method, calculate the revaluation gain (or loss) reported by Morey for its 25 percent investment in Amsterdamon June 30.c. Using the acquisition method, calculate the amount of goodwill recognized by Morey on Its December 31 consolidated balancesheet (assume no impairments have been recognized]d. Using the acquisition method, calculate the noncontrolling interest amount reported by Morey on its June 30 and December 31consolidated balance sheet.abCdAnswer is complete but not entirely correct.Acquisition-date fair valueRevaluation gainGoodwillNoncontrolling interest on June 30Noncontrolling interest on December 31S895,00011.875268 500SSSS80,03580,035

Acquisation Date fair value= Acquisation Date fair value= Acquisation Fair Value = 895000

a. Using the acquisition method, calculate the acquisition-date fair value of Amsterdam to be included in Morey's June 30 consolidated financial statements. b. Using the acquisition method, calculate the revaluation gain (or loss) reported by Morey for its 25 percent investment in Amsterdam on June 30. c. Using the acquisition method, calculate the amount of goodwill recognized by Morey on its December 31 consolidated balance sheet (assume no impairments have been recognized) d. Using the acquisition method, calculate the noncontrolling interest amount reported by Morey on its June 30 and December 31 consolidated balance sheet. Answer is complete but not entirely correct. d a b Revaluation gain Goodwill Acquisition-date fair value Noncontrolling interest on June 30 Noncontrolling interest on December 31 5 895,000 S 11,875 S 268,500 5 5 80,035 C 80,035 C

a. Using the acquisition method, calculate the acquisition-date fair value of Amsterdam to be included in Morey's June 30 consolidated financial statements. b. Using the acquisition method, calculate the revaluation gain (or loss) reported by Morey for its 25 percent investment in Amsterdam on June 30. c. Using the acquisition method, calculate the amount of goodwill recognized by Morey on its December 31 consolidated balance sheet (assume no impairments have been recognized) d. Using the acquisition method, calculate the noncontrolling interest amount reported by Morey on its June 30 and December 31 consolidated balance sheet. Answer is complete but not entirely correct. d a b Revaluation gain Goodwill Acquisition-date fair value Noncontrolling interest on June 30 Noncontrolling interest on December 31 5 895,000 S 11,875 S 268,500 5 5 80,035 C 80,035 C

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: . what is the basis for consolidation? 2. is goodwill being remeasured to fair value at each…

A: Consolidated financial statements refer to that financial statement that reflects the overall…

Q: Which of the following statements is true regarding the acquisition method of accounting for a…

A: The assets and liabilities of the acquired company are recognised at their fair values at the…

Q: 3. On January 3, 2022, Ideal Inc. purchased 87,500 shares representing 35% interest in Son Company's…

A: E. All of the above.

Q: S1: Under the acquisition method, if the fair values of identifiable net assets exceed the value…

A: Statement 1 : The acquisition of the other business can be taken in various methods. 1.…

Q: Problem #4 Assuming the following transaction details for an acquisition, calculate the amount of…

A: Share value=Number of share×Per share price=45,500,000×$12.30=$559,650,000

Q: 1.compute the amount of goodwill acquired 2.Record the acquisition in a financial statements model.…

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

Q: Measurement of Goodwill A parent has purchased a 100% interest in a subsidiary for $30,000. On the…

Q: 1. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was…

A: A journal entry is a type of accounting entry that is used to record a business transaction in a…

Q: ☐ Compute the investment to be recorded at the date of acquisition. A) $1,750. B) $1,755. C) $1,725.…

A: Problem 1: Compute the investment to be recorded at the date of acquisition. To compute the…

Q: Northern Company acquired Southern Company. The purchase price included all Southern's assets and…

A: If the purchase price of an asset is higher than its fair value then the excess amount of money paid…

Q: amount of goodwill at the acquisition date. Part B Determine the following numbers from the…

A: Shares - An equity ownership stake in a corporation is represented by a share. Dividends from any…

Q: Use the following to answer questions 8 through 10: On May 1, 2021, Jazzie Co. agreed to sell the…

A: SOLUTION- WORKING NOTE- GAIN ON ASSET SALE = ($80 MILLION - $ 48 MILLION)…

Q: User Which of the following is true about the Determination and Distribution Schedule? a/ It…

A: a) It measures the excess of the fair value of the subsidiary over the fair value of net…

Q: What is the total amount of goodwill recognized at the date of acquisition?

A: Step 1 : Introduction to Goodwill:Goodwill is an intangible asset created when a company purchases…

Q: Eliminating Entries, Goodwill Polaris Company acquires all of the stock of SSC, Inc. for $60 million…

A: Elimination journal entries are used in accounting to eliminate inter company transactions between…

Q: In the year ended June 30 2021, Lorelai Ltd, a reporting entity, acquired the assets and assumed the…

A: When a company's ownership is acquired by another company, is is said to be an acquisition. When 2…

Q: Using the acquisition method for a business combination, goodwill is generally defined as Select…

A: Using the acquisition method for a business combination goodwill is defined as the investment cost…

Q: Company A acquires 80% of Company B's outstanding shares for $7 million. The fair value of Company…

A: The objective of this question is to calculate the amount of goodwill to be recognized as a result…

Question

On January 1, 2021, Morey, Inc., exchanged $176,425 for 25 percent of Amsterdam Corporation. Morey appropriately applied the
equity method to this investment. At January 1, the book values of Amsterdam's assets and liabilities approximated their fair values
On June 30, 2021, Morey paid $626,500 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95
percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam's total fair value. At June 30, the carrying
amounts of Amsterdam's assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to
goodwill
Amsterdam reports the following amounts at December 31, 2021 (credit balances shown in parentheses);
Revenues
Expenses
Retained earnings, January 11
Dividends declared, October 1
Common stock
Amsterdam's revenue and expenses were distributed evenly throughout the year, and no changes in Amsterdam's stock have
occurred
a. Using the acquisition method, calculate the acquisition-date fair value of Amsterdam to be included in Morey's June 30
consolidated financial statements.
$ (313,000)
218,000
(275,100)
20,000
(500,000)
b. Using the acquisition method, calculate the revaluation gain (or loss) reported by Morey for its 25 percent investment in Amsterdam
on June 30.
c. Using the acquisition method, calculate the amount of goodwill recognized by Morey on Its December 31 consolidated balance
sheet (assume no impairments have been recognized]
d. Using the acquisition method, calculate the noncontrolling interest amount reported by Morey on its June 30 and December 31
consolidated balance sheet.
a
b
C
d
Answer is complete but not entirely correct.
Acquisition-date fair value
Revaluation gain
Goodwill
Noncontrolling interest on June 30
Noncontrolling interest on December 31
S895,000
11.875
268 500
S
S
S
S
80,035
80,035

Expert Solution

This question has been solved!

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

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Calculation of the Acquisation date fair value

VIEW

Step 2: Calculation of the Revaluation Gain

VIEW

Step 3: Calculation of the Goodwill

VIEW

Step 4: Calculation of the Non Controlling interest

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 9 images

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

Tanner Company, a subsidiary acquired for cash, owned Furniture with a fair value higher than the book value as of the date of combination. A consolidated balance sheet prepared immediately after the acquisition would include this difference in: Select one: a. Furniture b. retained earnings c. differential d. goodwill
The consolidated balance of fixed assets will be affected by working paper entries involving all of the following, except: A. Excess of fixed asset FV over BV of the parent at the date of acquisition B. Amortization of the excess of fixed asset FV over BV of the subsidiary at the date of acquisition C. Realized gain or loss on intercompany sale of fixed asset D. Unrealized gain or loss on intercompany sale of fixed asset
When the parent's Investment in S account is eliminated in the consolidation process, what replaces this item on the consolidated financial statements? A) The acquisition-date fair values of S's net assets, adjusted for any post-acquisition amortization of Differential. B) The acquisition-date book values of S's net assets, adjusted for any post-acquisition amortization of Differential. C) The book value of S's net assets and S's beginning retained earnings only. D) Only the new goodwill generated from the transaction.
Which of the following is/are true regarding goodwill achieved through acquisition as part of business combination? Where the acquirer was able to purchase the business at a discount, the excess of the market capitalization over the consideration transferred will be recognized in profit or loss. The acquirer shall recognize goodwill as of the acquisition date measured as the excess of the aggregate of the consideration transferred over the net of the fair values of all the assets acquired and the liabilities assumed Group of answer choices Both statements are true. None of these statements are true. 2 only. 1 only.
Hoolia Corporation acquires equipment and patents from another company for $50 million and records the acquisition as an asset acquisition. The equipment has a fair value of $19.20 million and the patents have a fair value of $28.80 million. Neither asset is nonqualifying. At what value does Hoolia record the equipment? Select one: a. $25.0 million b. $20.0 million c. $21.2 million d. $19.2 million
If a seller makes an intra-entity sale of a depreciable asset at a price above book value, the seller’s beginning Retained Earnings is reduced when preparing each subsequent consolidation. Why does the amount of the adjustment change from year to year?
Any inter-company gain on a downstream sale of fixed assets should be recognized in consolidated net income: I. in the year of the downstream sale.II. over the period of time the subsidiary uses the asset.III. in the year the subsidiary sells the assets to an unrelated party. Group of answer choices I. II. III. I and II