On January 1, 2024, Payne acquired an additional 80 percent interest in Scout and provided the following fair-value assessments ofScout's ownership components:Consideration transferred by Payne for 80% interestFair value of Payne's 15 % previous ownershipNoncontrolling interest's 5% fair valueTotal acquisition-date fair value for Scout CompanyAlso, as of January 1, 2024, Payne assessed a $403,000 value to an unrecorded database internally developed by Scout. Thedatabase is anticipated to have a remaining life of four years. Scout's other assets and liabilities were judged to have fair values equalto their book values. Payne elects to continue applying the equity method to this investment for internal reporting purposes.At December 31, 2024, the following financial information is available for consolidation:RevenuesOperating expensesEquity earnings of ScoutGain on revaluation of Investment in Scoutto fair valueNet incomeRetained earnings, January 1ItemsNet incomeDividends declaredRetained earnings, December 31CurrentetsInvestment in Scout (equity method)Property, plant, and equipmentPatented technologyDatabaseTotal assetsLiabilitiesCommon stockAdditional paid-in capitalRetained earnings, December 31Total liabilities and equities$ 1,408,000264,00088,000$ 1,760,000Payne Company Scout Company$ (937,900)$ (387,000)619,500(49,448)234, 2000(61,595)$ 429,443$ (961,500)(429,443)139,500$ (1,251,443)$ 286,9001,682,783834,000858, 30000$ 152,800$ (611,200)(152,800)40,700$ (723,300)$ 550,000597,000374,5000$ 1,521,500$ (85,600)(509,000)(203,600)(723,300)$ 3,661,983$ (1,319,540)(905,000)(186,000)(1,251,443)$ (3,661,983) $ (1,521,500)Required:a. How should Payne allocate Scout's total acquisition-date fair value (January 1, 2024) to the assets acquired and liabilities assumedfor consolidation purposes?

The cost of investment includes the cash transferred, Fair value of assets transferred, fair value…

On January 1, 2024, Payne acquired an additional 80 percent interest in Scout and provided the following fair-value assessments of Scout's ownership components: Consideration transferred by Payne for 80% interest Fair value of Payne's 15 % previous ownership Noncontrolling interest's 5% fair value Total acquisition-date fair value for Scout Company $ 1,408,000 264,000 88,000 $ 1,760,000

On January 1, 2024, Payne acquired an additional 80 percent interest in Scout and provided the following fair-value assessments of Scout's ownership components: Consideration transferred by Payne for 80% interest Fair value of Payne's 15 % previous ownership Noncontrolling interest's 5% fair value Total acquisition-date fair value for Scout Company $ 1,408,000 264,000 88,000 $ 1,760,000

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

On January 1, 2024, Payne acquired an additional 80 percent interest in Scout and provided the following fair-value assessments of
Scout's ownership components:
Consideration transferred by Payne for 80% interest
Fair value of Payne's 15 % previous ownership
Noncontrolling interest's 5% fair value
Total acquisition-date fair value for Scout Company
Also, as of January 1, 2024, Payne assessed a $403,000 value to an unrecorded database internally developed by Scout. The
database is anticipated to have a remaining life of four years. Scout's other assets and liabilities were judged to have fair values equal
to their book values. Payne elects to continue applying the equity method to this investment for internal reporting purposes.
At December 31, 2024, the following financial information is available for consolidation:
Revenues
Operating expenses
Equity earnings of Scout
Gain on revaluation of Investment in Scout
to fair value
Net income
Retained earnings, January 1
Items
Net income
Dividends declared
Retained earnings, December 31
Current
ets
Investment in Scout (equity method)
Property, plant, and equipment
Patented technology
Database
Total assets
Liabilities
Common stock
Additional paid-in capital
Retained earnings, December 31
Total liabilities and equities
$ 1,408,000
264,000
88,000
$ 1,760,000
Payne Company Scout Company
$ (937,900)
$ (387,000)
619,500
(49,448)
234, 200
0
(61,595)
$ 429,443
$ (961,500)
(429,443)
139,500
$ (1,251,443)
$ 286,900
1,682,783
834,000
858, 300
0
0
$ 152,800
$ (611,200)
(152,800)
40,700
$ (723,300)
$ 550,000
597,000
374,500
0
$ 1,521,500
$ (85,600)
(509,000)
(203,600)
(723,300)
$ 3,661,983
$ (1,319,540)
(905,000)
(186,000)
(1,251,443)
$ (3,661,983) $ (1,521,500)
Required:
a. How should Payne allocate Scout's total acquisition-date fair value (January 1, 2024) to the assets acquired and liabilities assumed
for consolidation purposes?

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