Philker Corporation acquires 80% of the voting stock of Superfast Inc. at an acquisition cost of $300,000. The fair value of the noncontrolling interest is $50,000. Superfast's equity at the date of acquisition is as follows:
$$\begin{array} { l r }
\text { Capital stock } & \$ 10,000 \
\text { Retained earnings } & 55,000 \
\text { Accumulated other comprehensiye income } & 5,000 \
\text { Total } & \$ 70,000
\end{array}$$ Superfast's identifiable net assets are reported at values approximating fair value except that its inventories are overvalued by $1,000, its plant assets are overvalued by $25,000, and it has previously unreported identifiable intangible assets valued at $85,000.
Required
a. Calculate the date-of-acquisition goodwill.
b. Prepare the eliminating entries to consolidate Superfast at the date of acquisition.

Question

Philker Corporation acquires 80% of the voting stock of Superfast Inc. at an acquisition cost of $300,000. The fair value of the noncontrolling interest is $50,000. Superfast's equity at the date of acquisition is as follows:
 $$\begin{array} { l r } 
\text { Capital stock } & \$ 10,000 \
\text { Retained earnings } & 55,000 \
\text { Accumulated other comprehensiye income } & 5,000 \
\text { Total } & \$ 70,000
\end{array}$$ Superfast's identifiable net assets are reported at values approximating fair value except that its inventories are overvalued by $1,000, its plant assets are overvalued by $25,000, and it has previously unreported identifiable intangible assets valued at $85,000.
Required
a. Calculate the date-of-acquisition goodwill.
b. Prepare the eliminating entries to consolidate Superfast at the date of acquisition.

Quizplus · Accepted Answer

The Answer of Philker Corporation acquires 80% of the voting stock of Superfast Inc. at an acquisition cost of $300,000. The fair value of the noncontrolling interest is $50,000. Superfast's equity at the date of acquisition is as follows:
 $$\begin{array} { l r } 
\text { Capital stock } & \$ 10,000 \
\text { Retained earnings } & 55,000 \
\text { Accumulated other comprehensiye income } & 5,000 \
\text { Total } & \$ 70,000
\end{array}$$ Superfast's identifiable net assets are reported at values approximating fair value except that its inventories are overvalued by $1,000, its plant assets are overvalued by $25,000, and it has previously unreported identifiable intangible assets valued at $85,000.
Required
a. Calculate the date-of-acquisition goodwill.
b. Prepare the eliminating entries to consolidate Superfast at the date of acquisition.

Philker Corporation Acquires 80% of the Voting Stock of Superfast