Reference no: EM13950791
Sale of interest, alternative remaining interests. Cecil Inc. purchases 24,000 shares of Brown Corporation, which equates to an 80% interest, on January 1, 20X5. The following determination and distribution of excess schedule is prepared:
Determination and Distribution of Excess Schedule
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Company Implied Fair Value
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Parent Price (80%)
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NCI Value (20%)
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Fair value of subsidiary
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$ 937,500
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$750,000
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$187,500
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Less book value of interest acquired:
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Common stock, $10 par
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$ 300,000
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Retained earnings
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400,000
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Total stockholders' equity
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$ 700,000
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$700,000
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$700,000
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Interest acquired
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80%
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20%
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Book value
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$560,000
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$140,000
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Excess of fair value over book value
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$237,500
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$190,000
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$ 47,500
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Adjustment of identi?able accounts:
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Amortization
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Adjustment
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per Year
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Life
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Building
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$ 50,000
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$ 5,000
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10
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Goodwill
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187,500
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Total
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$237,500
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Brown Corporation reports net income of $35,000 for the six months ended July 1, 20X8.
Cecil's simple-equity-adjusted investment balance is $814,000 as of December 31, 20X7.
Prepare all entries for the sale of the Brown Corporation shares on July 1, 20X8, for each of the following situations:
1. 24,000 shares are sold for $850,000.
2. 12,000 shares are sold for $425,000.
3. 6,000 shares are sold for $212,500.
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