Parkovash, Incorporated, obtained 100 percent of Salerno Company's common stock on January 1, 2023, by issuing 11,700 shares of $10 par value common stock. Parkovash's shares had a $15 per share fair value. On that date, Salerno reported a net book value of $134,050. However, its equipment (with a 5-year remaining life) was undervalued by $7,550 in the company's accounting records. Also, Salerno had developed computer software with an assessed value of $33,900, although no value had been recorded on Salerno's books. The computer software had an estimated remaining useful life of 10 years.
Parkovash, Incorporated, obtained 100 percent of Salerno Company's common stock on January 1, 2023, by issuing 11,700 shares of $10 par value common stock. Parkovash's shares had a $15 per share fair value. On that date, Salerno reported a net book value of $134,050. However, its equipment (with a 5-year remaining life) was undervalued by $7,550 in the company's accounting records. Also, Salerno had developed computer software with an assessed value of $33,900, although no value had been recorded on Salerno's books. The computer software had an estimated remaining useful life of 10 years.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Step 1: Introduction:
VIEWStep 2: (a) Determine the Investment in Salerno account balance 12/31/24:
VIEWStep 3: (b) Determine the consolidated net income 2024:
VIEWStep 4: (c-1) Determine the balance of consolidated equipment - December 31, 2024:
VIEWStep 5: (c-2) Determine the change in consolidated equipment balance for change in method:
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