Presidio’s appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $8,350, Land by $16,000, and Buildings by $30,200. Presidio plans to maintain Mason’s separate legal identity and to operate Mason as a wholly owned subsidiary. Required: Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs. Separately determine each individual amount that Presidio Company would report in its consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from part (a). To verify the answers found in part (b), adjust Presidio's column of accounts for the journal entries in part (a) and then prepare a worksheet to consolidate the balance sheets of these two companies at the acquisition date.

Summer Company holds assets with a fair value of $125,000 and a book value of $93,000 and liabilities with a book value and fair value of $28,000. Required: Compute the following amounts if Parade Corporation acquires 65 percent ownership of Summer: a. What amount did Parade pay for the shares if no goodwill and no gain on a bargain purchase are reported? b. What amount did Parade pay for the shares if the fair value of the noncontrolling interest at acquisition is $45,150 and goodwill of $32,000 is reported? c. What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Parade pays $79,300 to acquire its ownership and goodwill of $25,000 is reported?

On January 1, 2018 Casey Corporation exchanged $3,210,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems. At the acquisition date, Casey prepared the following fair-value allocation schedule: Fair value of Kennedy (consideration transferred) Carrying amount acquired Excess fair value to buildings (undervalued) to licensing agreements (overvalued) to goodwill (indefinite life) Accounts Cash Accounts receivable Inventory Investment in Kennedy Buildings (net) Licensing agreements Goodwill Total assets Accounts payable Long-term debt Common stock Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records. Additional paid-in capital Retained earnings Total liabilities and equities $ Casey 480,000 1,420,000 1,490,000 3,210,000 5,992,500 0 $ 393,000…

HOW DOES A COMPANY REALLY DECIDE WHICH INVESTMENT METHOD TO APPLY? Pilgrim Products, Inc., buys a controlling interest in the common stock of Crestwood Corporation. Shortly after the acquisition, a meeting of Pilgrim's accounting department is convened to discuss the internal reporting procedures required by the ownership of this subsidiary. Each member of the staff has a definite opinion as to whether the equity method, initial value method, or partial equity method should be adopted. To resolve this issue, Pilgrim's chief financial officer outlines several of her concerns about the decision. I already understand how each method works. I know the general advantages and disadvantages of all three. I realize, for example, that the equity method provides more detailed information whereas the initial value method is much easier to apply. What I need to know are the factors specific to our situation that should be considered in deciding which method to adopt. I must make a recommendation…