Exam 4: Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value

On January 1,20X8,Chariot Company acquired 100 percent of Stryder Company for $220,000 cash.The trial balances for the two companies on December 31,20X8,included the following amounts: On the acquisition date,Stryder reported net assets with a book value of $170,000.A total of $10,000 of the acquisition price is applied to goodwill,which was not impaired in 20X8.Stryder's depreciable assets had an estimated economic life of 10 years on the date of combination.The difference between fair value and book value of tangible assets is related entirely to buildings and equipment.Chariot used the equity method in accounting for its investment in Stryder.Analysis of receivables and payables revealed that Stryder owed Chariot $10,000 on December 31,20X8. -Based on the information provided,the differential associated with this acquisition is:

On December 31,20X8,Mercury Corporation acquired 100 percent ownership of Saturn Corporation.On that date,Saturn reported assets and liabilities with book values of $300,000 and $100,000,respectively,common stock outstanding of $50,000,and retained earnings of $150,000.The book values and fair values of Saturn's assets and liabilities were identical except for land which had increased in value by $10,000 and inventories which had decreased by $5,000. -Based on the preceding information,what amount of differential will appear in the eliminating entries required to prepare a consolidated balance sheet immediately after the business combination,if the acquisition price was $240,000?

West,Inc.holds 100 percent of the common stock of Coast Company,an investment acquired for $680,000.Immediately following the combination,West's net assets have a book value of $1,150,000 and a fair value of $1,390,000.The book value and the fair value of Coast's net assets on the date of combination are $400,000 and $550,000,respectively.Immediately following the combination,a consolidated balance sheet is prepared. -Based on the information given above,what will be the amount of net assets reported in the consolidated balance sheet,prepared immediately following the combination?

On January 1,20X8,Chariot Company acquired 100 percent of Stryder Company for $220,000 cash.The trial balances for the two companies on December 31,20X8,included the following amounts: On the acquisition date,Stryder reported net assets with a book value of $170,000.A total of $10,000 of the acquisition price is applied to goodwill,which was not impaired in 20X8.Stryder's depreciable assets had an estimated economic life of 10 years on the date of combination.The difference between fair value and book value of tangible assets is related entirely to buildings and equipment.Chariot used the equity method in accounting for its investment in Stryder.Analysis of receivables and payables revealed that Stryder owed Chariot $10,000 on December 31,20X8. -Based on the information provided,what amount of retained earnings will be reported in the consolidated financial statements for the year?

On January 1,20X8,Chariot Company acquired 100 percent of Stryder Company for $220,000 cash.The trial balances for the two companies on December 31,20X8,included the following amounts: On the acquisition date,Stryder reported net assets with a book value of $170,000.A total of $10,000 of the acquisition price is applied to goodwill,which was not impaired in 20X8.Stryder's depreciable assets had an estimated economic life of 10 years on the date of combination.The difference between fair value and book value of tangible assets is related entirely to buildings and equipment.Chariot used the equity method in accounting for its investment in Stryder.Analysis of receivables and payables revealed that Stryder owed Chariot $10,000 on December 31,20X8. -Based on the information provided,what amount of net income will be reported in the consolidated financial statements for the year?

On January 1,20X9,Wilton Company acquired all of Sirius Company's common shares,for $365,000 cash.On that date,Sirius's balance sheet appeared as follows: The fair values of all of Sirius's assets and liabilities were equal to their book values except for inventory that had a fair value of $85,000,land that had a fair value of $60,000,and buildings and equipment that had a fair value of $250,000.Buildings and equipment have a remaining useful life of 10 years with zero salvage value.Wilton Company decided to employ push-down accounting for the acquisition.Subsequent to the combination,Sirius continued to operate as a separate company. -Based on the preceding information,what amount of differential will arise in the consolidation process?

On December 31,20X8,Mercury Corporation acquired 100 percent ownership of Saturn Corporation.On that date,Saturn reported assets and liabilities with book values of $300,000 and $100,000,respectively,common stock outstanding of $50,000,and retained earnings of $150,000.The book values and fair values of Saturn's assets and liabilities were identical except for land which had increased in value by $10,000 and inventories which had decreased by $5,000. -Based on the preceding information,what amount of goodwill will be reported if the acquisition price was $195,000?