Plaza, Ic., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2021, inexchange for $900,000 cash. At the acquisition date, Stanford's total fair value, including the noncontrollinginterest, was assessed at $1,125,000. Also at the acquisition date, Stanford's book value was $690,000.Several individual items on Stanford's financial records had fair values that differed from their book values asfollows:Book ValueFair ValueTrade names (indefinite life)$ 360,000$ 383,000Property and equipment (net, 8-yearremaining life)Patent (14-year remaining life)290,000132,000330,000272,000For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The followingaccount balances are for the year ending December 31, 2021, for both companies. For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The followingaccount balances are for the year ending December 31, 2021, for both companies.PlazaStanford(825,000)395,75036,25028,000Revenues$(1,400,000)2$Cost of goods soldDepreciation expenseAmortization expense774,000328,000(280,000)$ (578,000)Equity in income of StanfordNet income(365,000)$(530,000)(365,000)50,000$ (845,000)Retained earnings, 1/1/21$(1,275,000)(578,000)300,000Net incomeDividends declaredRetained earnings, 12/31/21$(1,553,000)Current assets860,0001,140,000240,0001,030,000$432,250Investment in StanfordTrade names360,000253,750104,000$ 1,150,000Property and equipment (net)PatentsTotal assets$ 3,270,000Accounts payable(142,000)(145,000)(120,000)( 40,000)(845,000)2$(300,000)(1,275,000)(1,553,000)Common stockAdditional paid-in capitalRetained earnings (above)Total liabilities and equities$(3,270,000)$(1,150,000)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. (For accountswhere multiple consolidation entries are required, combine all debit entries into one amount and enter thisamount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enterthis amount in the credit column of the worksheet. Input all amounts as positive values.)

Acquisition accounting is a set of formal guidelines which defines how assets liabilities,NCI and…

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 $ 383,000 Trade names (indefinite life) Property and equipment (net, 8-year remaining life) Patent (14-year remaining life) $ 360,000 290,000 132,000 330,000 272,000

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 $ 383,000 Trade names (indefinite life) Property and equipment (net, 8-year remaining life) Patent (14-year remaining life) $ 360,000 290,000 132,000 330,000 272,000

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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