Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $277,500. Steal reported the following net income and dividend payments: Net Year Income 20X7$45,000 20X8 55,000 20X9 30,000 Dividends Paid $25,000 35,000 10,000 On January 1, 20X7, Steal had $250,000 of $5 par value common stock outstanding and retained earnings of $150,000, and the fair value of the noncontrolling interest was $185,000. Steal held land with a book value of $22,500 and a market value of $30,000 and equipment with a book value of $320,000 and a market value of $360,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years. Required: a. Compute the increase in the fair value of patents held by Steal. Increase in fair value $ 15,000 b. Prepare the consolidation entries needed at January 1, 20X7, to prepare a consolidated balance sheet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $277,500. Steal reported the following net income and dividend payments: Net Year Income 20X7$45,000 20X8 55,000 20X9 30,000 Dividends Paid $25,000 35,000 10,000 On January 1, 20X7, Steal had $250,000 of $5 par value common stock outstanding and retained earnings of $150,000, and the fair value of the noncontrolling interest was $185,000. Steal held land with a book value of $22,500 and a market value of $30,000 and equipment with a book value of $320,000 and a market value of $360,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years. Required: a. Compute the increase in the fair value of patents held by Steal. Increase in fair value $ 15,000 b. Prepare the consolidation entries needed at January 1, 20X7, to prepare a consolidated balance sheet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 1BCRQ

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

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Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $277,500. Steal
reported the following net income and dividend payments:
Net Dividends
Year Income
20X7$45,000
20X8 55,000
20X9 30,000
Paid
$25,000
35,000
10,000
On January 1, 20X7, Steal had $250,000 of $5 par value common stock outstanding and retained earnings of $150,000,
and the fair value of the noncontrolling interest was $185,000. Steal held land with a book value of $22,500 and a
market value of $30,000 and equipment with a book value of $320,000 and a market value of $360,000 at the date of
combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents,
which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a
remaining economic life of eight years.
Required:
a. Compute the increase in the fair value of patents held by Steal.
Increase in fair
value
$ 15,000
b. Prepare the consolidation entries needed at January 1, 20X7, to prepare a consolidated balance sheet. (If no entry is
required for a transaction/event, select "No journal entry required" in the first account field.)

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Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $283,500. Steal reported the following net income and dividend payments: Year Net Income Dividends Paid 20X7 $ 48,000 $ 28,000 20X8 58,000 38,000 20X9 33,000 13,000 On January 1, 20X7, Steal had $256,000 of $10 par value common stock outstanding and retained earnings of $156,000, and the fair value of the noncontrolling interest was $189,000. Steal held land with a book value of $26,500 and a market value of $34,000 and equipment with a book value of $338,000 and a market value of $378,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years. Required: Compute the increase in the fair value of patents held by Steal. Prepare the…
Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $277,500. Steal reported the following net income and dividend payments: Dividends Paid Year Net Income 20X7 $ 45,000 $ 25,000 20X8 55,000 35,000 10,000 20X9 30,000 On January 1, 20X7, Steal had $250,000 of $6 par value common stock outstanding and retained earnings of $150,000, and the fair value of the noncontrolling interest was $185,000. Steal held land with a book value of $23,500 and a market value of $31,000 and equipment with a book value of $335,000 and a market value of $375,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years. Required: a. Compute the increase in the fair value of patents held by Steal. Increase in fair value
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