Procedures for 100% account adjustment except goodwill. Copper Company purchased 80% of the common stock of Adco Company for $700,000 plus direct acquisition costs of $30,000. At the time of the purchase, Adco Company had the following balance sheet:
|
Assets |
Liabilities and Equity |
||
|
Cash equivalents |
$ 120,000 |
Current liabilities |
$ 200,000 |
|
Inventory |
200,000 |
Bonds payable |
400,000 |
|
Land |
100,000 |
Common stock ($5 par) |
100,000 |
|
Building (net) |
450,000 |
Paid-in capital |
|
|
Equipment (net) |
230,000 |
in excess of par |
150,000 |
|
Total assets |
$1,100,000 |
Retained earnings |
250,000 |
|
Total liabilities and equity |
$1,100,000 |
||
Fair values differ from book values for all assets other than cash equivalents. The fair values are as follows:
|
Inventory |
$300,000 |
|
Land |
200,000 |
|
Building |
600,000 |
|
Equipment |
200,000 |
Using the Economic Unit Concept—Goodwill Only on the Controlling Interest, complete the following:
1. Prepare a determination and distribution of excess schedule. The D&D need not include amortization amounts.
2. Prepare the elimination entries that would be made on a consolidated worksheet prepared on the date of purchase.