100% purchase, goodwill, worksheet. On December 31, 20X1, Adam Company purchased 100% of the common stock of Scott Company for $475,000. On this date, any excess of cost over book value was attributed to accounts with fair values that differed from book values. These accounts of the Scott Company had the following fair values:
|
Inventory |
$140,000 |
|
Land |
45,000 |
|
Buildings and equipment |
225,000 |
|
Bonds payable |
105,000 |
|
Copyrights |
25,000 |
The following comparative balance sheets were prepared for the two companies immediately after the purchase:
|
Adam |
Scott |
|
|
Cash |
$160,000 |
$40,000 |
|
Accounts receivable |
70,000 |
30,000 |
|
Inventory |
130,000 |
120,000 |
|
Investment in Scott Company |
475,000 |
|
|
Land |
50,000 |
35,000 |
|
Building and equipment |
350,000 |
230,000 |
|
Accumulated depreciation |
100,000 |
50,000 |
|
Copyrights |
40,000 |
10,000 |
|
Total assets |
$1,175,000 |
$415,000 |
|
Current liabilities |
$192,000 |
$65,000 |
|
Bonds payable |
100,000 |
|
|
Common stock ($10 par), Adam |
100,000 |
|
|
Common stock ($5 par), Scott |
50,000 |
|
|
Paid in capital in excess of par |
250,000 |
70,000 |
|
Retained earnings |
633,000 |
130,000 |
|
Total liabilities and equity |
$1,175,000 |
$415,000 |
Required
1. Prepare zone and price analyses and a determination and distribution of excess schedule for the investment in Scott Company.
2. Complete a consolidated worksheet for Adam Company and its subsidiary Scott Company as of December 31, 20X1.