Reference no: EM13955884

Date of Acquisition Consolidation Eliminating Entries

Pennant Corporation acquired 80 percent of Saylor Company's common stock for $12,000,000 in cash. At the date of acquisition, Saylor's $3,000,000 of reported net assets were fairly stated, except land was undervalued by $200,000 and unrecorded in-process R&D was valued at $1,500,000. The estimated fair value of the non controlling interest is $2,600,000 at the acquisition date.

Required:-

(a) Calculate total goodwill and its allocation to the controlling and non controlling interests.

Allocation of goodwill between controlling and non controlling interest:
Total goodwill	$Answer
Pennant's goodwill	Answer
Goodwill to non controlling interest	$Answer

 

(b) Prepare the working paper eliminating entries needed to consolidate Pennant and Saylor at the date
of acquisition.

Consolidation Journal
Description	Debit	Credit
(E)
Answer Stockholders' equity - Saylor Investment in Saylor Cash	Answer	Answer
Answer Stockholders' equity - Saylor Investment in Saylor Cash	Answer	Answer
Non controlling interest in Saylor	Answer	Answer
(R)
Answer Land Investment in Saylor Cash	Answer	Answer
IPR&D	Answer	Answer
Goodwill	Answer	Answer
Answer Land Investment in Saylor Cash	Answer	Answer
Non controlling interest in Saylor	Answer	Answer