Pam Sam Other assets―net $5,845 $4500 Investment in Sam-75% 3,640 Expenses (including cost of sales) 5,285 800 Dividends 600 300 $15370 $5600 Capital stock, $10 par $4,000 $2,000 Additional paid-in capital 850 1200 Retained earnings 2,670 1500 Sales 7380 900 Income from Sam 470 $15370 $5600

Pam Sam Other assets―net $5,845 $4500 Investment in Sam-75% 3,640 Expenses (including cost of sales) 5,285 800 Dividends 600 300 $15370 $5600 Capital stock, $10 par $4,000 $2,000 Additional paid-in capital 850 1200 Retained earnings 2,670 1500 Sales 7380 900 Income from Sam 470 $15370 $5600

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

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 17E

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Question

On January 1, 2015, Pam Corporation made a significant acquisition, purchasing 75 percent of Sam Corporation's outstanding voting stock for a total of $4,200,000. Sam Corporation's stockholders' equity at that time was made up of the following components (all values in thousands): Capital stock with a par value of $10: $2,000 Additional paid-in capital: $1200 Retained earnings as of December 31, 2014: $1500 Total stockholders' equity: $4,700 The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10 percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent to goodwill. Fast forward to December 31, 2019, and the comparative trial balances for both Pam Corporation and Sam Corporation as follows: Determine the amounts that would appear in the consolidated financial statements of Pam Corporation and Sam for each of the following: 1. Goodwill at December 31, 2019

1. Goodwill at December 31, 2019
2. Non-controlling interest share for 2019
3. Consolidated retained earnings at December 31, 2018

Pam
Sam
Other assets―net
$5,845
$4500
Investment in Sam-75%
3,640
Expenses (including cost of sales)
5,285
800
Dividends
600
300
$15370
$5600
Capital stock, $10 par
$4,000
$2,000
Additional paid-in capital
850
1200
Retained earnings
2,670
1500
Sales
7380
900
Income from Sam
470
$15370
$5600

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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