90.2K

Verified Solution

Link Copied!

"a. Marion purchases equipment for $70,000.

b. Marion issues $350,000 of long-term bonds and later uses the proceeds to purchase a new Required building

.c. On January 1, 2016, Lange purchases 30% of the outstanding common stock of Charles Corporation for $230,000. This is an inuential investment. Charless stockholders equityis $700,000 on the date of the purchase. Any excess cost is attributed to equipment with a10-year life. Charles reports net income of $80,000 in 2016 and pays dividends of $25,000.

d. Controlling share of consolidated income for 2016 is $262,000; the noncontrolling interestin consolidated net income is $15,000. Lange pays $100,000 in dividends in 2016; Marionpays $15,000 in dividends in 2016."

please prepare: (1) a Value Analysis for the acquisition of Marion, the subsidiary; (2) a D&D schedule for the acquisition of Marion; (3) a D&D schedule for the purchase of the 30% interest in Charles (like the D&D schedule for Company E on the bottom of p. 331); (4) the T-Account worksheet and (5) the formal Statement of Cash Flows.

Problem 6-1 (LO 1) Cash flow, year subsequent to purchase. Marion Company is an 80% owned subsidiary of Lange Company. The interest in Marion is purchased on January 12 . 2015, for $680,000 cash. The fair value of the NCI was $170,000. At that date. Marion has stockholders' equity of $650,000. The excess price is attributed to equipment with a 5-year life undervalued by $50,000 and to goodwill. The following comparative consolidated trial balances apply to Lange Company and its subsidiary, Marion: December 3L- 2015 16,000 120,000 200,000 3,030,000 (1,086,000) Cash.. . Inventory. W ALALA Accounts Receivable Property, plant and Equipment Accumulated Depreciation w w w Investment in Charles Corporation (30%)- Goodwill. Accounts Payable...VALAWA....... Bonds Payable. . WILDELU.... Noncontrolling Interest Controlling Interest: Common Stock Ipar Additional Paid-In Capital in Excess of Par ... Retained Earnings Totals.com December 3L. 2016 24,500 160,000 300,000 3,450,000 (1.292,000) 244,500 150,000 (200,000) (450,000 (179.000) 150,000 (117.000). (100,000) (167,000) (1,000,000) (650,000) (396,000) (1,000,000) (650,000) (558,000) The 2016 information shown on page 362 is available for the Lange and Marion companies... Problem 6-1 (LO 1) Cash flow, year subsequent to purchase. Marion Company is an 80% owned subsidiary of Lange Company. The interest in Marion is purchased on January 12 . 2015, for $680,000 cash. The fair value of the NCI was $170,000. At that date. Marion has stockholders' equity of $650,000. The excess price is attributed to equipment with a 5-year life undervalued by $50,000 and to goodwill. The following comparative consolidated trial balances apply to Lange Company and its subsidiary, Marion: December 3L- 2015 16,000 120,000 200,000 3,030,000 (1,086,000) Cash.. . Inventory. W ALALA Accounts Receivable Property, plant and Equipment Accumulated Depreciation w w w Investment in Charles Corporation (30%)- Goodwill. Accounts Payable...VALAWA....... Bonds Payable. . WILDELU.... Noncontrolling Interest Controlling Interest: Common Stock Ipar Additional Paid-In Capital in Excess of Par ... Retained Earnings Totals.com December 3L. 2016 24,500 160,000 300,000 3,450,000 (1.292,000) 244,500 150,000 (200,000) (450,000 (179.000) 150,000 (117.000). (100,000) (167,000) (1,000,000) (650,000) (396,000) (1,000,000) (650,000) (558,000) The 2016 information shown on page 362 is available for the Lange and Marion companies

Answer & Explanation Solved by verified expert

See Answer