Need help with the following
Parent Company purchased an 80% interest in Subsidiary Company for $600,000 on January 1,
20XI, when Subsidiary Co had the following balanc sheet.
Assets
Cash $ 75,000
Inventory 120,000
Land 90,00
Building,net 270,000
Equipment,net 80,000
Total Assets $635,000
Liabilites and Equity
Current liabilites $100,000
Common Stock,$5 par 50,000
Paid-in capital in excess par 160,000
Retained earnings 325,000
Total Liabilites an Eqyuity $635,000
The fair values and book values of the identifiable net assets are the same except for the
following. Land is understated by $50,000. The building has a fair value of $250,000 and a 20-
year remaining life. The equipment has a fair value of $90,000 and a remaining life of 5 years.
Any remaining excess is attributed yo good will.
From Jan.1 through Dec. 31, 20XI, Sudsidiary Co. had net income of $150,000 and paid $20,000
in dividends.
Assume that Parent Co. uses \"the simple equity method\"to record its investments in Sudsidiary
Co.
A) Using the info above prepare,
(1) a Value Analysis Schedule 0n 1/01/XI
(2) Determination and Distribution of Excess Schedule on 1/01/XI
Solution
1.Value Analysis Schedule 0n 1/01/XI:
2.Determination and Distribution of Excess Schedule on 1/01/XI:AssetsAmounts
($)Cash75,000Inventory120,000Land140,000Building250,000Equipment90,000Total Assets
(a)675,000Current Liabilities (b)100,000Net Assets (a)-(b)575,000.
Need help with the followingParent Company purchased an 80 intere.pdf
1. Need help with the following
Parent Company purchased an 80% interest in Subsidiary Company for $600,000 on January 1,
20XI, when Subsidiary Co had the following balanc sheet.
Assets
Cash $ 75,000
Inventory 120,000
Land 90,00
Building,net 270,000
Equipment,net 80,000
Total Assets $635,000
Liabilites and Equity
Current liabilites $100,000
Common Stock,$5 par 50,000
Paid-in capital in excess par 160,000
Retained earnings 325,000
Total Liabilites an Eqyuity $635,000
The fair values and book values of the identifiable net assets are the same except for the
following. Land is understated by $50,000. The building has a fair value of $250,000 and a 20-
year remaining life. The equipment has a fair value of $90,000 and a remaining life of 5 years.
Any remaining excess is attributed yo good will.
From Jan.1 through Dec. 31, 20XI, Sudsidiary Co. had net income of $150,000 and paid $20,000
in dividends.
Assume that Parent Co. uses "the simple equity method"to record its investments in Sudsidiary
Co.
A) Using the info above prepare,
(1) a Value Analysis Schedule 0n 1/01/XI
(2) Determination and Distribution of Excess Schedule on 1/01/XI
Solution
1.Value Analysis Schedule 0n 1/01/XI:
2.Determination and Distribution of Excess Schedule on 1/01/XI:AssetsAmounts
($)Cash75,000Inventory120,000Land140,000Building250,000Equipment90,000Total Assets
(a)675,000Current Liabilities (b)100,000Net Assets (a)-(b)575,000
