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ABC Park&Strand Corporation

The document provides condensed balance sheets for Park Corporation and Strand Corporation as of January 1, 20x4. It then states that on January 2, 20x4, Park Corporation borrowed money to acquire 80% of Strand Corporation's shares. Any excess paid over book value was allocated to inventory and goodwill. The amounts for goodwill using proportionate basis and full consolidation are then provided.

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555 views1 page

ABC Park&Strand Corporation

The document provides condensed balance sheets for Park Corporation and Strand Corporation as of January 1, 20x4. It then states that on January 2, 20x4, Park Corporation borrowed money to acquire 80% of Strand Corporation's shares. Any excess paid over book value was allocated to inventory and goodwill. The amounts for goodwill using proportionate basis and full consolidation are then provided.

Uploaded by

Alyza
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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On January 1, 20x4, Park Corporation and Strand Corporation and their condensed balance sheet are as

follows:

PARK CORP. STRAND CORP.


Current Assets P70,000 P20,000
Non-current Assets 90,000 40,000
Total Assets P160,000 P60,000

Current Liabilities P30,000 P10,000


Long -term debt 50,000 -
Stockholders’ Equity 80,000 50,000
Total Liabilities and Equities P160,000 P 60,000

On January 2,20x4, Park Corporation borrowed P60,000 and used the proceeds to obtain 80% of the
outstanding common shares of Strand Corporation. The P60,000 debt is payable in 10 equal annual
principal payments, plus interest, beginning December 31, 20x4. The excess fair value of the investment
over the underlying book value of the acquired net assets is allocated to inventory (60%) and to goodwill
(40%).

On a consolidated balance sheet as of January 2, 20x4, what should be the amount for each of the
following?

The amount of goodwill using proportionate basis (partial):


Total Parent NCI
100% 80% 20%
Company fair value: 75,000 60,000 15,000 nci-full
Fair Value of net assets 50,000 + 15,000 65,000 52,000 13,000 nci-partial
10,000 8,000 2,000

Total Parent NCI


Company fair value 75,000 60,000 15,000
Book value of interest acquired SHE 50,00
Excess or differential 25,000
Less: Adjustments
inventories(60%x25000) 15,000
Goodwill 10,000

Answers:

Goodwill (partial) P 8,000

Goodwill (full) P 10,000

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