Eliminating Entries, Bargain Gain Phelps, Inc. acquires all of the stock of Skelton Company by issuing 1 million shares of its capital stock with a fair value of $18/share. At the date of acquisition, Skelton's current assets had a book value of $5 million and a fair value of $4 million, its noncurrent assets had a book value of $45 million and a fair value of $25 million, and its liabilities had a book value of $20 million, which approximated fair value. Skelton also has previously unreported identifiable intangibles, valued at $12 million, that meet ASC Topic 805's criteria for recognition. Skelton's shareholders' equity consists of capital stock of $38 million and a retained loss of $8 million (debit balance). Required a. Calculate the gain on acquisition and prepare Phelps' journal entry to record the acquisition on its own books. Enter answers in millions. Description ♦ + Description + Debit b. Prepare the eliminating entries necessary to consolidate the balance sheet accounts of Phelps and Skelton at the date of acquisition. Enter answers in millions. Ref Credit Debit Credit

Eliminating Entries, Bargain Gain Phelps, Inc. acquires all of the stock of Skelton Company by issuing 1 million shares of its capital stock with a fair value of $18/share. At the date of acquisition, Skelton's current assets had a book value of $5 million and a fair value of $4 million, its noncurrent assets had a book value of $45 million and a fair value of $25 million, and its liabilities had a book value of $20 million, which approximated fair value. Skelton also has previously unreported identifiable intangibles, valued at $12 million, that meet ASC Topic 805's criteria for recognition. Skelton's shareholders' equity consists of capital stock of $38 million and a retained loss of $8 million (debit balance). Required a. Calculate the gain on acquisition and prepare Phelps' journal entry to record the acquisition on its own books. Enter answers in millions. Description ♦ + Description + Debit b. Prepare the eliminating entries necessary to consolidate the balance sheet accounts of Phelps and Skelton at the date of acquisition. Enter answers in millions. Ref Credit Debit Credit

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 38P

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Eliminating Entries, Bargain Gain Phelps, Inc. acquires all of the stock of Skelton Company for $8 million in cash. At the date of acquisition, Skelton's current assets had a book value of $5 million and a fair value of $3 million, its noncurrent assets had a book value of $45 million and a fair value of $20 million, and its liabilities had a book value of $30 million, which approximated fair value. Skelton also has previously unreported identifiable intangibles, valued at $17 million, that meet ASC Topic 805's criteria for recognition. Skelton's shareholders' equity consists of capital stock of $25 million and a retained loss of $5 million (debit balance). Required a. Calculate the gain on acquisition and prepare Phelps' journal entry to record the acquisition on its own books. Enter answers in millions. Description Gain on acquisition Cash ◆ (R) Description Retained earnings Investment in Skelton Debit 2,000,000 8,000,000 Investment in Skelton 0 10,000,000 b. Prepare the eliminating…
Eliminating Entries, Bargain Gain Phelps, Inc. acquires all of the stock of Skelton Company by issuing 1 million shares of its capital stock with a fair value of $18/share. At the date of acquisition, Skelton's current assets had a book value of $5 million and a fair value of $4 million, its noncurrent assets had a book value of $45 million and a fair value of $25 million, and its liabilities had a book value of $20 million, which approximated fair value. Skelton also has previously unreported identifiable intangibles, valued at $12 million, that meet ASC Topic 805's criteria for recognition. Skelton's shareholders' equity consists of capital stock of $38 million and a retained loss of $8 million (debit balance). Required a. Calculate the gain on acquisition and prepare Phelps' journal entry to record the acquisition on its own books. Enter answers in millions. Description Investment in Skelton Capital stock Gain on acquisition (R) ◆ ◆ ◆ Check Retained earnings Investment in Skelton b.…
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Godo
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On January 1, 2021 Parent Corp. acquires 80% of Sub Inc. for $1,712,000 in cash consideration. The remaining 20% noncontrolling interest shares had an acquisition-date estimated fair value of $428,000. Sub’s acquisition-date total book value was $1,700,000. The fair value of Sub’s recorded assets and liabilities equaled their carrying amounts. However, Sub had two unrecorded assets – a trademark with an indefinite life and estimated fair value of $245,000 and several customer relationships estimated to be worth $180,000 with four-year remaining lives. Any remaining acquisition-date fair value in the Sub acquisition was considered goodwill. During 2021 Sub reported $172,000 net income and declared and paid dividends totaling $50,000. Also in 2021 Parent reported $350,000 net income, but neither declared nor paid dividends. What amount should Parent assign to the 20% noncontrolling interest of Sub at the acquisition date? How much of 2021 consolidated net income should be…