1)Plant Inc. a calendar year reporting company acquired 80% of Seed Inc.’s outstanding common stock for $ 484,000 on Dec. 31, 2018, when the fair value of Seed’s Net Assets was $ 568,000. The following data summarize the fair value calculation: (2 Marks)
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|
Book Value Element |
Amount $ |
Life Remaining |
|
Common Stock |
150,000 |
|
|
Retained Earnings |
135,000 |
|
|
Under –Or-Over Valuation |
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|
Inventory |
(9700) |
2 Months |
|
Land |
48,000 |
Indefinite |
|
Equipment |
96,000 |
8 Years |
|
Covenant –Not-To Compete |
40,000 |
5 Years |
|
Goodwill Element |
108,700 |
Indefinite |
|
Total Cost |
568,000 |
|
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Plant Inc. & Seed Inc.
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Worksheet
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As at Dec. 31, 2018
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|
Balance Sheet |
Plant($) |
Seed ($) |
|
Cash |
148,000 |
47,000 |
|
Account Receivable |
103,500 |
118,000 |
|
Inventory |
152,500 |
126,000 |
|
Investment in Seed – |
||
|
Book Value |
228,000 |
|
|
Excess Cost |
226,400 |
|
|
Land |
168,000 |
127,000 |
|
Building & Equipment |
400,000 |
309,000 |
|
Accumulated Depreciation |
-16,000 |
-102,000 |
|
Total Assets |
1,410,400 |
625,000 |
|
Payable & Accruals |
265,400 |
120,000 |
|
Long Term Assets |
290,000 |
220,000 |
|
Common Stock |
450,000 |
150,000 |
|
Retained Earnings |
405,000 |
135,000 |
|
Total Liabilities & Equity |
1,410,400 |
625,000 |
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You are required to
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(a) Prepare an Analysis of the Investment Account Through Dec. 31, 2018. Show clearly Book Value and Excess Value calculation by preparing tables.
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(b) Prepare all consolidation (Elimination Entries) as of Dec. 31, 2018.
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(c) Prepare a Consolidated Worksheet as at Dec. 31, 2018.
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