Paster Corporation Was Seeking to Expand Its Customer Base,and Wanted

question 10

Essay

Paster Corporation was seeking to expand its customer base,and wanted to acquire a company in a market area it had not yet served.Paster determined that the Semma Company was already in the market they were pursuing,and on January 1,2011,purchased a 25% interest in Semma to assure access to Semma's customer base.Paster paid $800,000,at a time when the book value of Semma's net equity was $3,000,000.Semma's book values equaled their fair values except for the following items:
Required:
Prepare a schedule to allocate any excess purchase cost to identifiable assets and goodwill.

---

Definitions:

Horizontal Analysis

A financial analysis technique that compares historical financial information over a series of reporting periods to identify trends and growth patterns.

Sales Uncollected

The amount of sales that have been made but not yet paid for by customers, also known as accounts receivable.

Inventory Turnover

A financial metric indicating how many times a company has sold and replaced its inventory over a certain period, often used to assess efficiency.

Internal Users

Individuals within an organization who use financial information to make decisions, including managers, employees, and internal auditors.