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Pam Corporation Paid $170,000 For An 80 Percent Interest in Sun Corporation

1. The document provides financial information for Pam and Sun as of December 31, 2016, including investment costs, fair values, book values, and allocated amortization of excess fair value over book value for inventories, plant assets, and patents. 2. It then shows consolidated balance sheet workpapers combining Pam and Sun's accounts, with adjustments for intercompany balances and allocated amortization. 3. Pam acquired 80% of Sun for $160,000, with the implied fair value of Sun at $212,500 and book value of $150,000, resulting in $62,500 excess fair value allocated across inventories, plant assets, and patents.

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Jalaj Gupta
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494 views3 pages

Pam Corporation Paid $170,000 For An 80 Percent Interest in Sun Corporation

1. The document provides financial information for Pam and Sun as of December 31, 2016, including investment costs, fair values, book values, and allocated amortization of excess fair value over book value for inventories, plant assets, and patents. 2. It then shows consolidated balance sheet workpapers combining Pam and Sun's accounts, with adjustments for intercompany balances and allocated amortization. 3. Pam acquired 80% of Sun for $160,000, with the implied fair value of Sun at $212,500 and book value of $150,000, resulting in $62,500 excess fair value allocated across inventories, plant assets, and patents.

Uploaded by

Jalaj Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Investment cost December 31,2016 170000

Implied fair value 212500


(170000/80%)
Book value of Sun 150000
(100000+50000)
Excess fair value over book value 62500
Allocated to Amortization Unamortized
2017-2020 Excess
Inventories 8750 8750 0
Plant assets 22500 10000 12500
Patent 31250 25000 6250
Goodwill 0 43750 18750

Plant assets 22500/9 years*4 years


Patents 31250/5 years*4 years
Consolidated balance sheet workpapers
Pam Sun Debit Credit
Assets
Cash $ 41,000 $ 35,000
Trade receivables $ 60,000 $ 55,000 $ 5,000
Dividends receivable $ 8,000 $ 8,000
Advance to sun $ 25,000 $ 25,000
Inventories $ 125,000 $ 35,000
Plant assets-net $ 300,000 $ 175,000 $ 12,500
Investment in sun $ 191,000 $ 191,000
Patents $ 6,250
Unamortized excess $ 18,750 $ 18,750
Total assets $ 750,000 $ 300,000
Equities
Accounts payable $ 50,000 $ 45,000 $ 5,000
Dividends payable $ 10,000 $ 8,000
Advance from Pam $ 25,000 $ 25,000
Capital stock $ 400,000 $ 100,000 $ 100,000
Retained earnings $ 300,000 $ 120,000 $ 120,000
Noncontrolling interest $ 47,750
Total equities $ 750,000 $ 300,000 $ 295,500 $ 295,500

Capital stock $ 100,000


Retained earnings $ 120,000
Unamortized excess $ 18,750
Total $ 238,750
20.0%
NCI-Share $ 47,750
a 5000
Consolidated totals b 25000
c
$ 76,000
$ 110,000 acquired 80%

$ 160,000
$ 487,500

$ 6,250

$ 839,750

$ 90,000
$ 2,000
$ -
$ 400,000
$ 300,000
$ 47,750
$ 839,750

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