Center, Inc., purchases 24,000 shares of Bruce Corporation, which equates to an 80% interest, on January 1, 2015.The following determination and distribution of excess schedule is prepared: (attached)Bruce Corporation reports net income of $35,000 for the six months ended July 1, 2018. Center’s simple-equity-adjusted investment balance is $864,000 as of December 31, 2017. Prepare all entries for the sale of the Brown Corporation shares on July 1, 2018, for each of the following situations:1. 24,000 shares are sold for $890,000.2. 12,000 shares are sold for $455,000.3. 6,000 shares are sold for $232,500. Determination and Distribution of Excess ScheduleCompanyImplied FairValueParentNCIPriceValue(80%)(20%)Fair value of subsidiary$1,000,000$800,000$200,000Less book value of interest acquired:Common stock ($10 par).Retained earnings .$ 300,000400,000Total stockholders' equity.$ 700,000$700,000$700,000Interest acquiredBook value.....80%20%$560,000$240,000$140,000$ 60,000Excess of fair value over book value$ 300,000Adjustment of identifiable accounts:AmortizationWorksheetAdjustmentper YearLifeKeyBuildingGoodwill.2$50,000250,000$ 5,000debit D110debit D2Total$ 300,000

Business combination: Business combination refers to the combining of one or more business…

Answered: Determination and Distribution of…

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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Center, Inc., purchases 24,000 shares of Bruce Corporation, which equates to an 80% interest, on January 1, 2015.
The following determination and distribution of excess schedule is prepared: (attached)

Bruce Corporation reports net income of $35,000 for the six months ended July 1, 2018. Center’s simple-equity-adjusted investment balance is $864,000 as of December 31, 2017. Prepare all entries for the sale of the Brown Corporation shares on July 1, 2018, for each of the following situations:
1. 24,000 shares are sold for $890,000.
2. 12,000 shares are sold for $455,000.
3. 6,000 shares are sold for $232,500.

Determination and Distribution of Excess Schedule
Company
Implied Fair
Value
Parent
NCI
Price
Value
(80%)
(20%)
Fair value of subsidiary
$1,000,000
$800,000
$200,000
Less book value of interest acquired:
Common stock ($10 par).
Retained earnings .
$ 300,000
400,000
Total stockholders' equity.
$ 700,000
$700,000
$700,000
Interest acquired
Book value.....
80%
20%
$560,000
$240,000
$140,000
$ 60,000
Excess of fair value over book value
$ 300,000
Adjustment of identifiable accounts:
Amortization
Worksheet
Adjustment
per Year
Life
Key
Building
Goodwill.
2$
50,000
250,000
$ 5,000
debit D1
10
debit D2
Total
$ 300,000

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