Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for$802,720 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessedat $1,003,400 although Sierra's book value was only $690,000. Also, several individual items on Sierra's financialrecords had fair values that differed from their book values as follows:Fair Value$ 290,000263,000216,000(157,600)Book Value$ 65,000287,000122,000(176,000)LandBuildings and equipment (10-year remaining life)Copyright (20-year remaining life)Notes payable (due in 8 years)For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. Thefollowing account balances are for the year ending December 31, 2021, for both companies. PadreSierra(684,900)432,00011,600Revenues$(1,394,980)Cost of goods soldDepreciation expenseAmortization expenseInterest expense774,000274,0006,1009,20052,100Equity in income of Sierra(177,120)Net income2$(472,000)$(226,000)Retained earnings, 1/1/21$(1,275,000)(472,000)(530,000)(226,000)65,000Net incomeDividends declared260,000Retained earnings, 12/31/21$(1,487,000)(691,000)856,160927,840360,000909,000Current assets764,700Investment in Sierra65,000275,400115,900$ 1,221,000LandBuildings and equipment (net)Copyright$ 3,053,000$ (275,000)(541,000)(300,000)(450,000)(1,487,000)Total assetsAccounts payableNotes payable(194,000)(176,000)(100,000)(60,000)(691,000)$ (1,221,000)Common stockAdditional paid-in capitalRetained earnings (above)Total liabilities and equities$(3,053,000)At year-end, there were no intra-entity receivables or payables.Prepare a worksheet to consolidate the financial statements of these two companies. (For accounts where multipleconsolidation entries are required, combine all debit entries into one amount and enter this amount in the debitcolumn of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in thecredit column of the worksheet. Input all amounts as positive values.)

Consolidation is the process of combining the assets, liabilities, and other financial components of…

Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $802,720 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra's book value was only $690,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Book Value Fair Value $ 65,000 287,000 122,000 (176,000) $ 290,000 263,000 216,000 (157,600) Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies.

Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $802,720 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra's book value was only $690,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Book Value Fair Value $ 65,000 287,000 122,000 (176,000) $ 290,000 263,000 216,000 (157,600) Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies.

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

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $802,720 cash. At the acquisition date, Sierra’s total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra’s book value was only $690,000. Also, several individual items on Sierra’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Land $ 65,000 $ 290,000 Buildings and equipment (10-year remaining life) 287,000 263,000 Copyright (20-year remaining life) 122,000 216,000 Notes payable (due in 8 years) (176,000 ) (157,600 ) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. Padre Sierra Revenues $ (1,394,980 ) $ (684,900 ) Cost of goods sold 774,000 432,000…
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $802,720 cash. At the acquisition date, Sierra’s total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra’s book value was only $690,000. Also, several individual items on Sierra’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Land $ 65,000 $ 290,000 Buildings andequipment (10-year remaining life) 287,000 263,000 Copyright (20-year remaining life) 122,000 216,000 Notes payable (due in 8 years) (176,000) (157,600) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies. Padre Sierra Revenues $(1,394,980) $ (684,900) Cost of goods sold 774,000 432,000 Depreciation expense 274,000 11,600…
Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2021, in exchange for $900,000 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,125,000. Also at the acquisition date, Stanford's book value was $690,000. Several individual items on Stanford’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Trade names (indefinite life) $ 360,000 $ 383,000 Property and equipment (net, 8-year remaining life) 290,000 330,000 Patent (14-year remaining life) 132,000 272,000 For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. Plaza Stanford Revenues $ (1,400,000 ) $ (825,000 ) Cost of goods sold 774,000 395,750…
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $802,720 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra's book value was only $690,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Book Value Land $ 65,000 Fair Value $ 290,000 Buildings and equipment (10-year remaining life) 287,000 Copyright (20-year remaining life) Notes payable (due in 8 years) 122,000 (176,000) 263,000 216,000 (157,600) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. Padre Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Retained earnings, 1/1/21 Net income…
Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $900,000 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,125,000. Also at the acquisition date, Stanford’s book value was $690,000.Several individual items on Stanford’s financial records had fair values that differed from their book values as follows:For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies.At year-end, there were no intra-entity receivables or payables.Prepare a worksheet to consolidate the financial statements of Plaza, Inc., and its subsidiary Stanford.
Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $1,079,300 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,349,125. Also at the acquisition date, Stanford's book value was $565,100. Several individual items on Stanford’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Tradenames (indefinite life) $ 292,900 $ 439,200 Property and equipment (net, 8-year remaining life) 241,600 260,000 Patent ( 14-year remaining life) 140,400 182,400 For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies. Plaza Stanford Revenues $ (938,600) $ (719,900) Cost of Good sold 518,900 322,400 Depreciation Expense 219,900 30,200 Amortization…
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Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $1,007,100 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,258,875. Also at the acquisition date, Stanford's book value was $533,800. Several individual items on Stanford’s financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 272,600 $ 405,100 Property and equipment (net, 8-year remaining life) 225,600 244,800 Patent (14-year remaining life) 130,400 161,200 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (829,600) $ (681,100) Cost of goods sold 458,600 300,000 Depreciation expense…
Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $941, 800 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,177,250. Also at the acquisition date, Stanford's book value was $546, 100. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 300, 900 $ 360, 900 Property and equipment (net, 8-year remaining life) 233, 600 262, 400 Patent (14-year remaining life) 120, 900 154, 500 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (795, 100) $ (782,600) Cost of goods sold 439, 600 331, 000 Depreciation expense 186, 400 29, 200…
Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $985,400 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,231,750. Also at the acquisition date, Stanford's book value was $532,500. Several individual items on Stanford’s financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 301,200 $ 354,900 Property and equipment (net, 8-year remaining life) 232,000 255,200 Patent (14-year remaining life) 120,400 161,000 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (828,200) $ (746,500) Cost of goods sold 458,700 321,700 Depreciation expense…
Padre, Incorporated, buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2024, for $791,520 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $989,400, although Sierra's book value was only $638,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Account Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) Book Value $ 65,200 295,000 Fair Value $ 307,200 276,000 104,000 (187,000) 218,000 (172,600) For internal reporting purposes, Padre, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Account Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Retained earnings,…
On July 19, 2021, SUNOB acquired 60% of the outstanding shares of YSAE. The business combination resulted to a gain on bargain purchase of P200,000. The consideration paid was exactly the fair value for the 60% outstanding stocks, and the fair value of the non-controlling interest is not given. Fair value of the net assets of YSAE amounted to P1,000,000 on that date. How much is the gain on acquisition attributable to SUNOB? a. 600,000 b. 120,000 c. Zero d. 200,000