Center, Inc., purchases 24,000 shares of Bruce Corporation, which equates to an 80% interest, on January 1, 2015.The following determination and distribution of excess schedule is prepared: (attached)Bruce Corporation reports net income of $35,000 for the six months ended July 1, 2018. Center’s simple-equity-adjusted investment balance is $864,000 as of December 31, 2017. Prepare all entries for the sale of the Brown Corporation shares on July 1, 2018, for each of the following situations:1. 24,000 shares are sold for $890,000.2. 12,000 shares are sold for $455,000.3. 6,000 shares are sold for $232,500. Determination and Distribution of Excess ScheduleCompanyImplied FairValueParentNCIPriceValue(80%)(20%)Fair value of subsidiary$1,000,000$800,000$200,000Less book value of interest acquired:Common stock ($10 par).Retained earnings .$ 300,000400,000Total stockholders' equity.$ 700,000$700,000$700,000Interest acquiredBook value.....80%20%$560,000$240,000$140,000$ 60,000Excess of fair value over book value$ 300,000Adjustment of identifiable accounts:AmortizationWorksheetAdjustmentper YearLifeKeyBuildingGoodwill.2$50,000250,000$ 5,000debit D110debit D2Total$ 300,000

Business combination: Business combination refers to the combining of one or more business…

Determination and Distribution of Excess Schedule Company Implied Fair Value Parent NCI Price Value (80%) (20%) Fair value of subsidiary $1,000,000 $800,000 $200,000 Less book value of interest acquired: Common stock ($10 par). Retained earnings . $ 300,000 400,000 Total stockholders' equity. $ 700,000 $700,000 $700,000 Interest acquired Book value..... 80% 20% $560,000 $240,000 $140,000 $ 60,000 Excess of fair value over book value $ 300,000 Adjustment of identifiable accounts: Amortization Worksheet Adjustment per Year Life Key Building Goodwill. 2$ 50,000 250,000 $ 5,000 debit D1 10 debit D2 Total $ 300,000

Determination and Distribution of Excess Schedule Company Implied Fair Value Parent NCI Price Value (80%) (20%) Fair value of subsidiary $1,000,000 $800,000 $200,000 Less book value of interest acquired: Common stock ($10 par). Retained earnings . $ 300,000 400,000 Total stockholders' equity. $ 700,000 $700,000 $700,000 Interest acquired Book value..... 80% 20% $560,000 $240,000 $140,000 $ 60,000 Excess of fair value over book value $ 300,000 Adjustment of identifiable accounts: Amortization Worksheet Adjustment per Year Life Key Building Goodwill. 2$ 50,000 250,000 $ 5,000 debit D1 10 debit D2 Total $ 300,000

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 1BCRQ

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