On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,814,720 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $453,680. Seidel's acquisition-date total book value was $1,802,000. The fair value of Seidel's recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $259,700 and several customer relationships estimated to be worth $190,800 with four-year remaining lives. Any remaining acquisition-date fair value in the Seidel acquisition was considered goodwill. During 2021, Seidel reported $182,320 net income and declared and paid dividends totaling $53,000. Also in 2021, Ackerman reported $371,000 net income, but neither declared nor paid dividends. a. What amount should Ackerman assign to the 20 percent noncontrolling interest of Seidel at the acquisition date? b. How much of 2021 consolidated net income should be allocated to the noncontrolling interest? c. What amount of 2021 dividends should be allocated to the noncontrolling interest? d. What amount of noncontrolling interest should appear in the owners' equity section of Ackerman's consolidated balance sheet at December 31, 2021? a. Value to be assigned to noncontrolling interest (NCI) at acquisition date b. Consolidated net income allocation to noncontrolling interest c. Dividend allocation to noncontrolling interest d. Noncontrolling interest in Seidel
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,814,720 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $453,680. Seidel's acquisition-date total book value was $1,802,000. The fair value of Seidel's recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $259,700 and several customer relationships estimated to be worth $190,800 with four-year remaining lives. Any remaining acquisition-date fair value in the Seidel acquisition was considered goodwill. During 2021, Seidel reported $182,320 net income and declared and paid dividends totaling $53,000. Also in 2021, Ackerman reported $371,000 net income, but neither declared nor paid dividends. a. What amount should Ackerman assign to the 20 percent noncontrolling interest of Seidel at the acquisition date? b. How much of 2021 consolidated net income should be allocated to the noncontrolling interest? c. What amount of 2021 dividends should be allocated to the noncontrolling interest? d. What amount of noncontrolling interest should appear in the owners' equity section of Ackerman's consolidated balance sheet at December 31, 2021? a. Value to be assigned to noncontrolling interest (NCI) at acquisition date b. Consolidated net income allocation to noncontrolling interest c. Dividend allocation to noncontrolling interest d. Noncontrolling interest in Seidel
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity
Section: Chapter Questions
Problem 37RQSC
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Transcribed Image Text:On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,814,720 in cash consideration. The remaining 20
percent noncontrolling interest shares had an acquisition-date estimated fair value of $453,680. Seidel's acquisition-date total book
value was $1,802,000.
The fair value of Seidel's recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets-
a trademark with an indefinite life and estimated fair value of $259,700 and several customer relationships estimated to be worth
$190,800 with four-year remaining lives. Any remaining acquisition-date fair value in the Seidel acquisition was considered goodwill.
During 2021, Seidel reported $182,320 net income and declared and paid dividends totaling $53,000. Also in 2021, Ackerman
reported $371,000 net income, but neither declared nor paid dividends.
a. What amount should Ackerman assign to the 20 percent noncontrolling interest of Seidel at the acquisition date?
b. How much of 2021 consolidated net income should be allocated to the noncontrolling interest?
c. What amount of 2021 dividends should be allocated to the noncontrolling interest?
d. What amount of noncontrolling interest should appear in the owners' equity section of Ackerman's consolidated balance sheet at
December 31, 2021?
a.
Value to be assigned to noncontrolling interest (NCI) at acquisition date
b. Consolidated net income allocation to noncontrolling interest
c. Dividend allocation to noncontrolling interest
d. Noncontrolling interest in Seidel
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