PROBLEM 2: (27 points) On January 1, 2016 Lennier Corporation exchanged $344,000 cash for a 90%...
PROBLEM 2: (27 points) On January 1, 2016 Lennier Corporation exchanged $344,000 cash for a 90% interest in Talia Corporation’s outstanding voting stock. Klingon’s acquisition balance sheet is in the accompanying Excel spreadsheet along with the financial statements for both companies for the year ended December 31, 2018.
On January 1, 2016, Lennier prepared the following fair value allocation schedule:
Consideration transferred by Lennier......................................... 344,000
10% noncontrolling interest fair value....................................... 36,000
Fair value of Talia....................................................................... 380,000
Book value of Talia..................................................................... 324,000
Excess fair value over book value................................................ 56,000
Allocated to equipment (remaining life=9 years).................... 18,000
Allocated to goodwill................................................................ 38,000
Required:
- Prepare a schedule showing the allocation of the goodwill to the controlling and noncontrolling interest.
- Prepare a schedule showing Lennier’s Equity in Talia’s Earnings for 2018.
- Prepare a schedule showing how Lennier determined the $488,900 balance in the Investment in Talia account.
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PROBLEM 2: (27 points) On
January 1, 2016 Lennier Corporation exchanged $344,000 cash for a
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76,000
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Retained earnings
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$
400,000
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400,000
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Consideration transferred by Parflex
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Consideration transferred by Parflex
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