Reference no: EM133053616

Questions -

Q1. Par Inc purchased all of the outstanding common shares of Sub Corp for cash of $374,487 on Jan 1, Year 1. On the date of acquisition, Sub's identifiable net assets had a carrying value of $299,578. The acquisition differential was allocated to the excess of fair value over book value as follows: inventory's fair value was higher by $29,941; Equipment's fair value was lower by $18,714; Trademarks' fair value was higher by $24,200; and Bonds Payable's fair value was higher by $7,485. Equipment, Trademarks, and Bonds Payable each had an amortizable life of ten (10) years. What will be the net consolidated adjustment to reflect the annual amortization of the differences between fair values and carrying values in Year 1?

a. $29,741

b. $30,485

c. $31,228

d. $28,998

e. $31,972

Q2. Par Inc owns 80.95% of Sub Corp. During the year, Par sold inventory to Sub for $111,119. Exactly 50.71% of this inventory remained in Y's warehouse at year end. Sub sold inventory to Par for $55,564 of which 42.35% remained in X's warehouse at year end. Both companies are subject to a tax rate of 30.27%. The gross profit percentage on sales is 20% for both companies. What is the after-tax dollar value of Par's unrealized profits during the year on its sales to Sub?

a. $8,251

b. $7,858

c. $8,448

d. $8,644

e. $8,055