Allerton Company acquires all of Deluxe Company's assets and liabilities for cash on January 1, 2024, and subsequently formallydissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts:ItemsCurrent assetsBuildingLandTrademarkGoodwillLiabilitiesCommon stockBook Values Fair Values$ 60,75098,750$ 60,75051,55010,50024,700032,90019,750?(54,750)(54,750)(100,000)(35,000)00esRetained earningsRequired:a. and b. Prepare Allerton's journal entry to record its acquisition of Deluxe in its accounting records assuming the following cashexchange amounts: $149,000 and $89,500.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.View transaction list☑1Record the acquisition of Deluxe assuming the cashexchange of $149,000.>,000.2Record the acquisition of Deluxe assuming the cashexchange of $89,500.

Step 1:Calculation of the FV of the net assets received: Step 2:Computation of the goodwill or…

Answered: Allerton Company acquires all of Deluxe…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please don't give handwritten answer..thanku Intercompany sale of depreciable assets Assume on January 1, 2018, a parent company acquired a 75% interest in a subsidiary’s voting common stock. On the date of acquisition, the fair value of the subsidiary’s net assets equaled their reported book values. On January 1, 2020, the subsidiary purchased a building for $345,600 The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2022, the subsidiary sold the building to the parent for $288,000 The parent estimated that the building had a six-year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2022, the parent’s “stand-alone” income (i.e., net income before recording any adjustments related to preconsolidation investment accounting) is $360,000 . The subsidiary’s recorded net income is $72,000. Based on this information, determine the…
On January 1, 2019, Monica Company acquired 80 percent of Young Company's outstanding common stock for $744,000. The fair value of the noncontrolling interest at the acquisition date was $186,000. Young reported stockholders' equity accounts on that date as follows: Common stock-$10 par value Additional paid-in capital Retained earnings In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $90,000. Any remaining excess acquisition-date fair value was allocated to a franchise agreement to be amortized over 10 years. $ 300,000 50,000 450,000 During the subsequent years, Young sold Monica inventory at a 20 percent gross profit rate. Monica consistently resold this merchandise in the year of acquisition or in the period immediately following. Transfers for the three years after this business combination was created amounted to the following: Year 2019 2020 2021 Transfer…
On January 1, 2018 Casey Corporation exchanged $3,210,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems. At the acquisition date, Casey prepared the following fair-value allocation schedule: Fair value of Kennedy (consideration transferred) Carrying amount acquired Excess fair value to buildings (undervalued) to licensing agreements (overvalued) to goodwill (indefinite life) Accounts Cash Accounts receivable Inventory Investment in Kennedy Buildings (net) Licensing agreements Goodwill Total assets Accounts payable Long-term debt Common stock Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records. Additional paid-in capital Retained earnings Total liabilities and equities $ Casey 480,000 1,420,000 1,490,000 3,210,000 5,992,500 0 $ 393,000…
Goodwill arising
None
On January 1, 2021, Casey Corporation exchanged $3,300,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems. At the acquisition date, Casey prepared the following fair-value allocation schedule: Fair value of Kennedy (consideration transferred) $ 3,300,000 Carrying amount acquired 2,600,000 Excess fair value $ 700,000 to buildings (undervalued) $ 382,000 to licensing agreements (overvalued) (108,000 ) 274,000 to goodwill (indefinite life) $ 426,000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses). Accounts Casey Kennedy Cash $ 457,000 $ 172,500 Accounts receivable 1,655,000…

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