Adams Corporation acquired 90 percent of the outstanding voting shares of Barstow, Inc., on December 31, 2016. Adams paid a total of $603,000 in cash for these shares. The 10 percent noncontrolling interest shares traded on a daily basis at fair value of $67,000 both before and after Adams's acquisition. On December 31, 2016, Barstow had the following account balances: Вook Value Fair Value Current assets. Land. Buildings (10-year remaining life) Equipment (5-year remaining life) Patents (10-year remaining life). . Notes payable (due in 5 years) . Common stock........... Retained earnings, 12/31/16. $160.000 120,000 220,000 160,000 -0- (200.000) (180,000) (280,000) $160,000 150.000 200,000 200,000 50,000 (180,000) December 31, 2018, adjusted trial balances for the two companies follow: Adams Corporation Barstow, Inc. Debits Current assets $ 610,000 $ 250,000 380,000 150,000 250,000 150,000 Land 490.000 Buildings. Equipment . 873,000 702,000 480,000 -0- Investment in Barstow, Inc Cost of goods sold Depreciation expense Interest expense. 90,000 100,000 55,000 40,000 110,000 15,000 Dividends declared. 70,000 Total debits $3,785,000 $1,030,000 Credits $ 860.000 $ 230,000 180,000 340,000 Notes payable . 510,000 1,367,000 940,000 _108,000 Common stock Retained earnings, 1/1/18. Revenues 280,000 Investment income. -0- Total credits. $3,785,000 $1,030,000 page 205 At year-end, there were no intra-entity receivables or payables.
Adams Corporation acquired 90 percent of the outstanding voting shares of Barstow, Inc., on December 31, 2016. Adams paid a total of $603,000 in cash for these shares. The 10 percent noncontrolling interest shares traded on a daily basis at fair value of $67,000 both before and after Adams's acquisition. On December 31, 2016, Barstow had the following account balances: Вook Value Fair Value Current assets. Land. Buildings (10-year remaining life) Equipment (5-year remaining life) Patents (10-year remaining life). . Notes payable (due in 5 years) . Common stock........... Retained earnings, 12/31/16. $160.000 120,000 220,000 160,000 -0- (200.000) (180,000) (280,000) $160,000 150.000 200,000 200,000 50,000 (180,000) December 31, 2018, adjusted trial balances for the two companies follow: Adams Corporation Barstow, Inc. Debits Current assets $ 610,000 $ 250,000 380,000 150,000 250,000 150,000 Land 490.000 Buildings. Equipment . 873,000 702,000 480,000 -0- Investment in Barstow, Inc Cost of goods sold Depreciation expense Interest expense. 90,000 100,000 55,000 40,000 110,000 15,000 Dividends declared. 70,000 Total debits $3,785,000 $1,030,000 Credits $ 860.000 $ 230,000 180,000 340,000 Notes payable . 510,000 1,367,000 940,000 _108,000 Common stock Retained earnings, 1/1/18. Revenues 280,000 Investment income. -0- Total credits. $3,785,000 $1,030,000 page 205 At year-end, there were no intra-entity receivables or payables.
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 2E
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Prepare schedules for acquisition-date fair-value allocations and amortizations for Adams’s investment in Barstow.
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