Packo Company Acquired All the Voting Stock of Sennett Corporation

question 47

Essay

Packo Company acquired all the voting stock of Sennett Corporation on January 1,2014 for $90,000 when Sennett had Capital Stock of $50,000 and Retained Earnings of $8,000.The excess of fair value over book value was allocated as follows: (1)$5,000 to inventories (sold in 2014),(2)$16,000 to equipment with a 4-year remaining useful life (straight-line method of depreciation)and (3)the remainder to goodwill.
Financial statements for Packo and Sennett at the end of the fiscal year ended December 31,2015 (two years after acquisition),appear in the first two columns of the partially completed consolidation working papers.Packo has accounted for its investment in Sennett using the equity method of accounting.
Required:
Complete the consolidation working papers for Packo Company and Subsidiary for the year ending December 31,2015.

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Definitions:

Likert Scale

A psychometric scale commonly involved in research that employs questionnaires, designed to gauge the attitude or response of a subject towards a set of criteria, using a linear scale.

Reliability

The degree to which an assessment tool produces stable and consistent results over multiple administrations or applications under the same conditions.

Validity

The extent to which a concept, conclusion, or measurement is well-founded and likely corresponds accurately to the real world.

100% Reliable

An absolute level of dependability and consistency in performance or outcome that is often considered unachievable in practice.