Amortization procedures, several years. Walt Company purchased an 80% interest in Mitchell Company common stock on January 1, 20X1. Appraisals of Mitchell’s assets and liabilities were performed, and Walt ended up paying an amount that was greater than the fair value of Mitchell’s net assets. The following determination and distribution of excess schedule was created on December 31, 20X1, to assist in putting together the consolidated financial statements:
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Determination and Distribution of Excess Schedule |
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Price paid for investment |
$1,100,000 |
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Less book value interest acquired: |
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Common stock |
$100,000 |
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Paid in capital in excess of par |
150,000 |
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Retained earnings |
350,000 |
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Total equity |
$600,000 |
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Interest acquired |
X80% |
480,000 |
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Excess of cost over book value (debit) |
$620,000 |
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Adjustments to first priority accounts: |
Life |
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Inventory |
$5,000 |
1 |
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Investments |
20,000 |
5 |
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Land |
40,000 |
— |
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Bonds payable |
10,000 |
5 |
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Buildings (net) |
200,000 |
20 |
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Equipment (net) |
138,000 |
5 |
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Patent |
18,000 |
10 |
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Trademark |
16,000 |
10 |
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Goodwill |
173,000 |
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Total adjustments |
$620,000 |
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Prepare an amortization schedule for the years 20X1, 20X2, 20X3, and 20X4.