P Company paid $5,000,000 (cash) for an 80% interest in S Company on 7/1/07. The book values and fair values of S's assets and liabilities on the date of acquisition were as follows: BV FV Cash $400 $400 Accounts Receivable $800 $800 Inventories $1,200 $1,900 Other Current Assets $100 $400 Land $2,400 $800 Building (10 year life) $1,400 $1,000 Patent (10 year life) $1,300 $1,200 Total Assets $7,600 $6,500 Accounts Payable $400 $400 Accrued Liabilities $200 $100 B/P (10 year maturity) Common Stock Retained Earnings Total $1,000 $5,000 $1,000 $7,600 $1,200 The company earned income of $240,000 ($20,000 per month) in 2007 and paid total dividends of $200,000 on October 1, 2007. Required 1)C the goo from the acquisition 2) Compute the Equity method Income from Sub. for 2007. 3) Record the Equity method journal entries for 2007.

P Company paid $5,000,000 (cash) for an 80% interest in S Company on 7/1/07. The book values and fair values of S's assets and liabilities on the date of acquisition were as follows: BV FV Cash $400 $400 Accounts Receivable $800 $800 Inventories $1,200 $1,900 Other Current Assets $100 $400 Land $2,400 $800 Building (10 year life) $1,400 $1,000 Patent (10 year life) $1,300 $1,200 Total Assets $7,600 $6,500 Accounts Payable $400 $400 Accrued Liabilities $200 $100 B/P (10 year maturity) Common Stock Retained Earnings Total $1,000 $5,000 $1,000 $7,600 $1,200 The company earned income of $240,000 ($20,000 per month) in 2007 and paid total dividends of $200,000 on October 1, 2007. Required 1)C the goo from the acquisition 2) Compute the Equity method Income from Sub. for 2007. 3) Record the Equity method journal entries for 2007.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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S acquired 100 percent of F for P275,000. At the date of acquisition, F had the following book and market values: (see image below) What is the amount of the “Investment in F” account on S’s financial records at the acquisition date?
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S acquired 100 percent of F for P275,000. At the date of acquisition, F had the following book and market values: (see image below) What is the amount of the “Investment in F” account on S’s financial records at the acquisition date? What amount of pre-acquisition earnings is eliminated in the acquisition date worksheet elimination? Please answer in good accounting form. Thank you!
first picture is information for the second picture. thank you!!
Sagar
Alpesh
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