What was the amount of goodwill that arose on the acquisition of Soda's common shares on January 1, 2022?
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- On January 1, 2022, Pop Co. acquired 75% of the outstanding common shares of Soda Inc. for $161,250 cash. On that date, Soda had common shares of $156,250 and retained earnings of $31,250. At acquisition, the identifiable assets and liabilities of Soda had fair values that were equal to carrying amounts except for inventory, which had fair value $8,000 greater than carrying amount and plant and equipment, which had fair values $10,000 greater than carrying amounts. The plant and equipment had a remaining useful life of 5 years on January 1, 2022.Any goodwill will be tested yearly for impairment. Balance sheets as of December 31, 2022 are presented below: Cash Accounts receivable Inventory Land Plant & Equipment, net Investment in Soda Inc. - equity Current liabilities Bonds payable Common shares Retained earnings Pop Co. $ 10,000 Soda Inc. $ 5,000 38,750 42,250 75,250 62,500 50,000 100,000 150,000 175,000 168,500 $384,750 $492,500 $ 45,500 - 338,000 109,000 $492,500 $ 47,125 128,125…On January 1, 2018, Johnsonville Enterprises, Inc., acquired 80 percent of Stayer Company’s outstanding common shares in exchange for $3,000,000 cash. The price paid for the 80 percent ownership interest was proportionately representative of the fair value of all of Stayer’s shares.At acquisition date, Stayer’s books showed assets of $4,200,000 and liabilities of $1,600,000. The recorded assets and liabilities had fair values equal to their individual book values except that a building (10-year remaining life) with book value of $195,000 had an appraised fair value of $345,000. Stayer’s books showed a $175,500 carrying amount for this building at the end of 2018.Also, at acquisition date Stayer possessed unrecorded technology processes (zero book value) with an estimated fair value of $1,000,000 and a 20-year remaining life. For 2018 Johnsonville reported net income of $650,000 (before recognition of Stayer’s income), and Stayer separately reported earnings of $350,000. During 2018,…On January 1, 2023, Palka, Incorporated, acquired 70 percent of the outstanding shares of Sellinger Company for $1,328,600 in cash. The price paid was proportionate to Sellinger's total fair value, although at the acquisition date, Sellinger had a total book value of $1,660,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger's accounting records by $228,000. On January 1, 2024, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $510,000 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends: Items Net income Dividends declared. Required: a. Show Palka's journal entry to record its January 1, 2024, acquisition of an additional 25 percent ownership of Sellinger Company shares. b.…
- On January 1, 2023, Palka, Incorporated, acquired 70 percent of the outstanding shares of Sellinger Company for $1,232,700 in cash. The price paid was proportionate to Sellinger's total fair value, although at the acquisition date, Sellinger had a total book value of $1,490,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger's accounting records by $261,000. On January 1, 2024, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $511,875 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends: Items Net income Dividends declared 2023 $ 570,000 160,000 Required A Required B $ Required: a. Show Palka's journal entry to record its January 1, 2024, acquisition of an additional 25…On January 1, 2021, Johnsonville Enterprises, Inc., acquired 80 percent of Stayer Company's outstanding common shares in exchange for $3,000,000 cash. The price paid for the 80 percent ownership interest was proportionately representative of the fair value of all of Stayer's shares. At acquisition date, Stayer's books showed assets of $4,200,000 and liabilities of $1,600,000. The recorded assets and liabilities had fair values equal to their individual book values except that a building (10-year remaining life) with book value of $195,000 had an appraised fair value of $345,000. Stayer's books showed a $175,500 carrying amount for this building at the end of 2021. Also, at acquisition date Stayer possessed unrecorded technology processes (zero book value) with an estimated fair value of $1,000,000 and a 20-year remaining life. For 2021, Johnsonville reported net income of $650,000 (before recognition of Stayer's income), and Stayer separately reported earnings of $350,000. During 2021,…On January 1, 2023, Novak Corporation, a public company following IFRS, acquired 15,900 of the 53,000 outstanding common shares of Noah Corp. for $22 per share. Noah's statement of financial position reported the following information at the date of the acquisition: Assets not subject to depreciation $289,800 Assets subject to depreciation 860,100 Liabilities 150,100 Additional information: 1. On the acquisition date, the fair value is the same as the carrying amount for the assets that are not subject to depreciation and for the liabilities. 2. 3. 4. On the acquisition date, the fair value of the assets that are subject to depreciation is $964,100. These assets had a remaining useful life of eight years at that time. Noah reported 2023 net income of $104,000 and paid dividends of $5,000 in December 2023. Noah's shares are not actively traded on the stock exchange, but Novak has determined that they have a fair value of $21 per share on December 31, 2023. (a) Your answer is partially…
- On January 1, 2023, Flounder Corporation, a public company following IFRS, acquired 17,400 of the 58,000 outstanding common shares of Noah Corp. for $27 per share. Noah's statement of financial position reported the following information at the date of the acquisition: Assets not subject to depreciation $287,800 Assets subject to depreciation 863,600 Liabilities 148,600 Additional information: 1. On the acquisition date, the fair value is the same as the carrying amount for the assets that are not subject to depreciation and for the liabilities. 2. 3. 4. On the acquisition date, the fair value of the assets that are subject to depreciation is $957,600. These assets had a remaining useful life of eight years at that time. Noah reported 2023 net income of $94,000 and paid dividends of $4,500 in December 2023. Noah's shares are not actively traded on the stock exchange, but Flounder has determined that they have a fair value of $25 per share on December 31, 2023. (a) Prepare the journal…On January 1, 2018, Johnsonville Enterprises, Inc., acquired 80 percent of Stayer Company’s oustanding common shares in exchange for $3,000,000 cash. The price paid for the 80 percent ownership interest was proportionately representative of the fair value of all of Stayer’s shares.At acquisition date, Stayer’s books showed assets of $4,200,000 and liabilities of $1,600,000. The recorded assets and liabilities had fair values equal to their individual book values except that a building (10-year remaining life) with book value of $195,000 had an appraised fair value of $345,000. Stayer’s books showed a $175,500 carrying amount for this building at the end of 2018.Also, at acquisition date Stayer possessed unrecorded technology processes (zero book value) with an estimated fair value of $1,000,000 and a 20-year remaining life. For 2018 Johnsonville reported net income of $650,000 (before recognition of Stayer’s income), and Stayer separately reported earnings of $350,000. During 2018,…On January 1, 2020, Pfizer Corp. acquired 80% of Vaxx Corp.’s common stock for P160,000 cash. The fair value of the non-controlling interest at the date was determined to be P40,000. Data from the balance sheets of the two companies included the following accounts as of the date of acquisition: On the date of the business combination, the book values of Vaxx Corp’s net assets and liabilities approximated fair value except for inventory, which has a fair value of P45,000, and land, which had a fair value of P60,000. (using full goodwill approach). Pfizer Corporation Vaxx Corporation Cash 60,000 20,000 Accounts receivable 80,000 30,000 Inventory 90,000 40,000 Land 100,000 40,000 Buildings and equipment 200,000 150,000 Less: Accumulated depreciation (80,000) (50,000) Investment in Vaxx Corp. stock 160,000 - Total Assets 610,000 230,000 Accounts payable 110,000 30,000 Bonds…
- On January 1, 2020, Pfizer Corp. acquired 80% of Vaxx Corp.’s common stock for P160,000 cash. The fair value of the non-controlling interest at the date was determined to be P40,000. Data from the balance sheets of the two companies included the following accounts as of the date of acquisition: On the date of the business combination, the book values of Vaxx Corp’s net assets and liabilities approximated fair value except for inventory, which has a fair value of P45,000, and land, which had a fair value of P60,000. (using full goodwill approach). Pfizer Corporation Vaxx Corporation Cash 60,000 20,000 Accounts receivable 80,000 30,000 Inventory 90,000 40,000 Land 100,000 40,000 Buildings and equipment 200,000 150,000 Less: Accumulated depreciation -80,000 -50,000 Investment in Vaxx Corp. stock 160,000 - Total Assets 610,000 230,000 Accounts payable 110,000 30,000 Bonds payable 95,000 40,000…On January 1, 2020, Pfizer Corp. acquired 80% of Vaxx Corp.’s common stock for P160,000 cash. The fair value of the non-controlling interest at the date was determined to be P40,000. Data from the balance sheets of the two companies included the following accounts as of the date of acquisition: On the date of the business combination, the book values of Vaxx Corp’s net assets and liabilities approximated fair value except for inventory, which has a fair value of P45,000, and land, which had a fair value of P60,000. (using full goodwill approach). Pfizer Corporation Vaxx Corporation Cash 60,000 20,000 Accounts receivable 80,000 30,000 Inventory 90,000 40,000 Land 100,000 40,000 Buildings and equipment 200,000 150,000 Less: Accumulated depreciation (80,000) (50,000) Investment in Vaxx Corp. stock 160,000 - Total Assets 610,000 230,000 Accounts payable 110,000 30,000 Bonds…On January 1, 2020, Pfizer Corp. acquired 80% of Vaxx Corp.’s common stock for P160,000 cash. The fair value of the non-controlling interest at the date was determined to be P40,000. Data from the balance sheets of the two companies included the following accounts as of the date of acquisition: On the date of the business combination, the book values of Vaxx Corp’s net assets and liabilities approximated fair value except for inventory, which has a fair value of P45,000, and land, which had a fair value of P60,000. (using full goodwill approach). Pfizer Corporation Vaxx Corporation Cash 60,000 20,000 Accounts receivable 80,000 30,000 Inventory 90,000 40,000 Land 100,000 40,000 Buildings and equipment 200,000 150,000 Less: Accumulated depreciation -80,000 -50,000 Investment in Vaxx Corp. stock 160,000 - Total Assets 610,000 230,000 Accounts payable 110,000 30,000 Bonds payable 95,000 40,000 Common stock 200,000 40,000…
