PROBLEM Scenario 3-4

question 6

Essay

PROBLEM
Scenario 3-4
On January 1, 20X1, Parent Company purchased 80% of the common stock of Subsidiary Company for $316,000. On this date, Subsidiary had common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000, respectively. Net income and dividends for 2 years for Subsidiary Company were as follows:
On January 1, 20X1, the only tangible assets of Subsidiary that were undervalued were inventory and building. Inventory, for which FIFO is used, was worth $5,000 more than cost. The inventory was sold in 20X1. Building, which was worth $15,000 more than book value, has a remaining life of 8 years, and straight-line depreciation is used. Any remaining excess is goodwill.
-Refer to Scenario 3-4.
Required:
a. Prepare a value analysis schedule
b. Prepare a determination and distribution of excess schedule

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Definitions:

First Month

Refers to the initial month of a period, which can relate to the life of an infant, the start of a project, or any new beginning.

After Birth

Refers to the period following the birth of an infant, focusing on recovery for the mother and adjustment to life for the newborn.

Sensorimotor Substage

A phase within Piaget's sensorimotor stage, which describes the development of infants through their senses and motor activities.

Tertiary Circular Reactions

A stage in Jean Piaget's theory of cognitive development, occurring roughly between 12 and 18 months, characterized by the purposeful adaptation of established schemes to new situations.