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 bookvalue was only $638,000. Also, several individual items on Sierra's financial records had fair values that differed from their book valuesas follows:AccountLandBuildings and equipment (10-year remaining life)Copyright (20-year remaining life)Notes payable (due in 8 years)Book Value$ 65,200295,000Fair Value$ 307,200276,000104,000(187,000)218,000(172,600)For internal reporting purposes, Padre, Incorporated, employs the equity method to account for this investment. The following accountbalances are for the year ending December 31, 2024, for both companies.AccountRevenuesCost of goods soldDepreciation expenseAmortization expenseInterest expenseEquity in income of SierraNet incomeRetained earnings, 1/1/24Net incomeDividends declaredRetained earnings, 12/31/24Current assetsInvestment in SierraLandBuildings and equipment (net)CopyrightTotal assetsAccounts payableNotes payableCommon stockAdditional paid-in capitalRetained earnings (above)Total liabilities and equitiesAt year-end, there were no intra-entity receivables or payables.Required:Padre$ (1,401,180)770,000264,000050,700(151,520)$ (468,000)$ (1,492,500)(468,000)260,000$ (1,700,500)$ 998,460891,040349,000944,0000$ 3,182,500$ (205,000)(527,000)(300,000)(450,000)(1,700,500)$ (3,182,500)Prepare a worksheet to consolidate the financial statements of these two companies.Sierra$ (647,000)426,00015,5005,2005,3000$ (195,000)$ (478,000)(195,000)65,000$ (608,000)$ 681,500065,200279,50098,800$ 1,125,000$ (170,000)(187,000)(100,000)(60,000)(608,000)$ (1,125,000)For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amountin the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the creditcolumn of the worksheet. Input all amounts as positive values.

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: Land Account Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Book Value $ 65,200 Fair Value $ 307,200 295,000 104,000 276,000 218,000

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: Land Account Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Book Value $ 65,200 Fair Value $ 307,200 295,000 104,000 276,000 218,000

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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Please Compute the Goodwill on the Acquisition Data. That is all of the Information that is needed for the question Also Please make sure it is correct
On July 1, 2021, Gupta Corporation bought 30% of the outstanding common stock of VB Company for $170 million cash, giving Gupta the ability to exercise significant influence over VB’s operations. At the date of acquisition of the stock, VB’s net assets had a total fair value of $490 million and a book value of $220 million. Of the $270 million difference, $50 million was attributable to the appreciated value of inventory that was sold during the last half of 2021, $160 million was attributable to buildings that had a remaining depreciable life of 10 years, and $60 million related to equipment that had a remaining depreciable life of 5 years. Between July 1, 2021, and December 31, 2021, VB earned net income of $60 million and declared and paid cash dividends of $50 million. Required:1. Prepare all appropriate journal entries related to the investment during 2021, assuming Gupta accounts for this investment by the equity method. a. Record the purchase of VB company shares for $170.0…
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…
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