Adams Corporation acquired 90 percent of the outstanding voting shares of Barstow, Inc., on December 31, 2016. Adams paid a total of $603,000 in cash for these shares. The 10 percent noncontrolling interest shares traded on a daily basis at fair value of $67,000 both before and after Adams's acquisition. On December 31, 2016, Barstow had the following account balances: Вook Value Fair Value Current assets. Land. Buildings (10-year remaining life) Equipment (5-year remaining life) Patents (10-year remaining life). . Notes payable (due in 5 years) . Common stock........... Retained earnings, 12/31/16. $160.000 120,000 220,000 160,000 -0- (200.000) (180,000) (280,000) $160,000 150.000 200,000 200,000 50,000 (180,000) December 31, 2018, adjusted trial balances for the two companies follow: Adams Corporation Barstow, Inc. Debits Current assets $ 610,000 $ 250,000 380,000 150,000 250,000 150,000 Land 490.000 Buildings. Equipment . 873,000 702,000 480,000 -0- Investment in Barstow, Inc Cost of goods sold Depreciation expense Interest expense. 90,000 100,000 55,000 40,000 110,000 15,000 Dividends declared. 70,000 Total debits $3,785,000 $1,030,000 Credits $ 860.000 $ 230,000 180,000 340,000 Notes payable . 510,000 1,367,000 940,000 _108,000 Common stock Retained earnings, 1/1/18. Revenues 280,000 Investment income. -0- Total credits. $3,785,000 $1,030,000 page 205 At year-end, there were no intra-entity receivables or payables.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 2E

See similar textbooks

Related questions

Concept explainers

Question

Prepare schedules for acquisition-date fair-value allocations and amortizations for Adams’s investment in Barstow.

40. Adams Corporation acquired 90 percent of the outstanding voting shares of Barstow, Inc., on December 31, 2016. Adams paid a total of $603,000 in cash for these shares. The
10 percent noncontrolling interest shares traded on a daily basis at fair value of $67,000 both before and after Adams's acquisition. On December 31, 2016, Barstow had the
following account balances:
Вook
Value
Fair
Value
$160,000
120,000
220,000
160,000
-0-
$160,000
150,000
200,000
200,000
50,000
(200,000) (180,000)
Current assets
Land.
Buildings (10-year remaining life).
Equipment (5-year remaining life)
Patents (10-year remaining life).
Notes payable (due in 5 years)
Common stock.
Retained earnings, 12/31/16.
(180,000)
(280,000)
December 31, 2018, adjusted trial balances for the two companies follow:
Adams Corporation
Barstow, Inc.
Debits
Current assets
$ 610,000
$ 250,000
Land.
380,000
150,000
490,000
250,000
Buildings.
Equipment..
Investment in Barstow, Inc
873,000
150,000
702,000
480,000
-0-
90,000
Cost of goods sold..
Depreciation expense
100,000
55,000
Interest expense.
40,000
15,000
Dividends declared.
110,000
70,000
Total debits..
$3,785,000
$1,030,000
Credits
$ 860,000
510,000
$ 230,000
180,000
Notes payable .
Common stock.
1,367,000
340,000
Retained earnings, 1/1/18.
Revenues..
940,000
280,000
Investment income.
108,000
-0-
Total credits .
$3,785,000
$1,030,000
page 205
At year-end, there were no intra-entity receivables or payables.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.