On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $2,001,000. At that time Sharp Company hadcommon stock of $1,518,000 and retained earnings of $692,000. The book values of Sharp Company's assets and liabilities were equalto their fair values except for land and bonds payable. The land had a fair value of $98,000 and a book value of $79,000. Theoutstanding bonds were issued at par value on January 1, 2008, pay 9% annually, and mature on January 1, 2018. The bond principal is$497,000 and the current yield rate on similar bonds is 7%. Prepare the workpaper entries necessary on December 31, 2013, to allocate and depreciate the difference between book valueand the value implied by the purchase price. (Round answers to 0 decimal places, e.g. 5,125. If no entry is required, select"No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when theamount is entered. Do not indent manually.)Account Titles and ExplanationLandGoodwillDifference between Implied and Book ValueInterest ExpenseUnamortized Premium on Bonds PayableDebit19000313007Credit55982001000

There are different types of mergers and acquisitions. When two companies merge and form a new…

On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $2,001,000. At that time Sharp Company had common stock of $1,518,000 and retained earnings of $692,000. The book values of Sharp Company's assets and liabilities were equal to their fair values except for land and bonds payable. The land had a fair value of $98,000 and a book value of $79,000. The outstanding bonds were issued at par value on January 1, 2008, pay 9% annually, and mature on January 1, 2018. The bond principal is $497,000 and the current yield rate on similar bonds is 7%.

On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $2,001,000. At that time Sharp Company had common stock of $1,518,000 and retained earnings of $692,000. The book values of Sharp Company's assets and liabilities were equal to their fair values except for land and bonds payable. The land had a fair value of $98,000 and a book value of $79,000. The outstanding bonds were issued at par value on January 1, 2008, pay 9% annually, and mature on January 1, 2018. The bond principal is $497,000 and the current yield rate on similar bonds is 7%.

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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