Company merger | acct 5390 | California State University, San Bernardino

Problem 1 E2(14 Points):

Santa Corporation is 80 percent owned subsidiary of Panta Corporation, acquired by Panta on January 1, 20X1 for \$320,000 when Santa’s common stock and retained earnings were \$100,000 and \$160,000 respectively. All book values of Santa’s assets and liabilities were equal to their fair values except inventory which was undervalued by \$60,000 and unrecorded patent which its fair value is equal the remaining of differential value with remaining life of 10 years.  Both firms are using FIFO method of inventory.  Followings are the transactions of merchandize between these two firms:

———————————————————————————————————–      Cost  Sales value  Ending Inventory

———————————————————————————————————–

20X1  Panta sold to Santa  \$80,000 \$100,000  \$25,000

20X2  Panta sold to Santa     60,000      80,000    16,000

————————————————————————————————————

—————————————————————————————————————–         Panta      Santa

——————————————————————————————————————

Separate income (not included Investment income) for 20X1    \$40,000 \$100,000

Dividend    15,000       8,000

Income statements for Panta and Santa Corporations for 20X2 are:

—————————————————————————————————————–         Panta      Santa

——————————————————————————————————————

Sales  \$300,000  \$150,000

Income from Santa        34,600

Cost of Sales    (200,000)  ( 90,000)

Other expenses    (  67,000)   (10,000)

Net Income  \$ 67,600  \$ 50,000

Dividend  0  0

Balance Sheet item (December 31, 20X2):

Investment in Santa  \$368,800

Required:

1.  Calculate total fair value of Santa as of 1/1/20X1 (1 point).

320,000/80%=400,000

2.  Calculate total value of the patent (1 point).

400,000-100,000-160,000=140,000

3.  Calculate investment income recorded by Panta for 20X1(1 point).

40,000*80%=32,000

4.  Calculate balance of investment in Santa in the book of Panta as of Dec.r 31, 20X1 (1 point)

Purchase value investments.

Less: patents written off 20%of

5.  Verify the amount 20X2 of Income from Santa for \$34,600 (1 point).

6.  Unrealized profit in Santa’s beginning inventory is (1 point): \$_________________.

7.  Unrealized profit in Santa’s ending inventory is (1 point): \$_________________.

8.  Patent (net) that appear in the Dec. 31, 20X2 consolidated balance sheet (show all of your calculations) (1 point):

\$_________________.

9.  Verify the balance of investment in Santa that appear in the 20X2 Panta’s balance sheet

(1 point):

\$_________________.

10.  How much investment in Santa is reported in the 20X2 consolidated balance sheet?

(1 point)

\$_______________.

11.  Minority Interest Income (Expense) for 20×2 (show all of your calculations)is (1 point):

\$________________.

12.  Consolidated (controlling group) net income for 20X2 is (1 point):  \$_______________.

13, Show, in detail, working paper eliminating entries for all inter-company merchandize inventory transactions in order to prepare 20×2 consolidated financial statements

(1 points).

14.  Prepare Consolidated Income Statement for year 20X2 (1 point).

Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
\$0.00

How it works?

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.