100% purchase, goodwill, push down accounting. On March 1, 20X5, Collier Enterprises purchased a 100% interest in Robby Corporation for $480,000. It was decided that Robby Corporation will apply push down accounting principles to account for this acquisition. Robby Corporation had the following balance sheet on February 28, 20X5:
|
Robby Corporation |
|||
|
Assets |
Liabilities and Equity |
||
|
Accounts receivable |
$60,000 |
Current liabilities |
$50,000 |
|
Inventory |
80,000 |
Bonds payable |
100,000 |
|
Land |
40,000 |
Common stock |
50,000 |
|
Buildings |
300,000 |
Paid in capital in excess of par |
250,000 |
|
Accum depr—building |
120,000 |
Retained earnings |
70,000 |
|
Equipment |
220,000 |
||
|
Accum depr—equipment |
60,000 |
||
|
Total assets |
$520,000 |
Total liabilities and equity |
$520,000 |
Collier Enterprises received an independent appraisal on the fair values of Robby Corporation’s assets. The controller has reviewed the following figures and accepts them as reasonable.
|
Inventory |
$100,000 |
|
Land |
55,000 |
|
Building |
200,000 |
|
Equipment |
150,000 |
|
Bonds payable |
98,000 |
Required
1. Record the investment in Robby Corporation.
2. Prepare a zone analysis and a determination and distribution of excess schedule.
3. Give Robby Corporation’s adjusting entry.