Pawl Corporation Acquired 90% of Snab Corporation on January 1

question 4

Essay

Pawl Corporation acquired 90% of Snab Corporation on January 1, 2014 for $72,000 cash when Snab's stockholders' equity consisted of $30,000 of Capital Stock and $30,000 of Retained Earnings. The difference between the fair value of Pawl's assets and liabilities and the book value was allocated to a plant asset with a remaining 10-year straight-line life that was overvalued on the books by $5,000. The remainder was attributable to goodwill. The separate company statements for Pawl and Snab appear in the first two columns of the partially completed consolidation working papers.
Required:
Complete the consolidation working papers for Pawl and Snab for the year 2014.

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Definitions:

Net Present Value

A financial metric that calculates the present value of all cash flows, both incoming and outgoing, of an investment.

Managers

People in charge of managing or overseeing any or all parts of a corporation or comparable entity.

Firm Value

The total value of a company, determined by its earnings potential and the market's perception of its future growth prospects.