Question

Assume that on 1/1/xx, a parent company acquired 90% interest in a subsidiary. The total fair value of the controlling and noncontrolling interests was $480,000 over book value. The parent assigned the excess to: PPE with a fair value of $160,000 and useful life of 20 years, Patent with a fair value of $80,000 and useful life of 10 years, Customer list with a fair value of $40,000 and useful life of 10 years, and Goodwill with a fair value of 200,000.90% of the Goodwill is assigned to the Parent.Using the spreadsheet:Prepare the consolidated financial statements at 12/31/xx by placing the appropriate entries in their respective debit/credit column cells.Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is a [C], [E], [A]or [D] entry.Use Excel formulas to derive the Consolidated column amounts and totals.Using the "Home" key in Excel, go to the "Styles" area and highlight the [C], [E], [A], and [D] entry cells in different shades.

Answer 1

Answer:

balance sheet

investment on subsidiary X

investment on subsidiary above value- PPE 136,800

investment on subsidiary above value- Patent 64.800

investment on subsidiary above value- Consumer list 32,400

investment on subsidiary - goodwill                              180,000

Explanation:

We will multiply the 480,000 difference between bok value and fair value by the 90% share of the parent company. Then, we divide by the useful life to know the amortization.

PPE  160,000 x 90% = $ 144,000

20 years useful life

 amortization 7,200

PATENT 80,000 X 90% = $  72,000

10 years useful life

amortization 7,200

CONSUMER LIST 40,000 x 90% = $  36,000

10 years useful life

amortization 3,600

these will be the amrtzation during the year and decreasing the amounts of the value above book value.