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Exercise 5-9 On January 1, 2013, Point Corporation acquired an 80% interest in Sharp Company for $1,962,000. At that time Sharp Company had common stock of $1,530,000 and retained earnings of $688,000. The book values of Sharp Company's assets and liabilities were equal to their fair values except for land and bonds payable. The land had a fair value of $102,000 and a book value of $81,000. The outstanding bonds were issued at par value on January 1, 2008, pay 9% annually, and mature on January 1, 2018. The bond principal is $507,000 and the current yield rate on similar bonds is 7%. (a) Your answer is correct. Prepare a Computation and Allocation Schedule for the difference between book value and the value implied by the purchase price in the consolidated statements workpaper on the acquisition date. (Round present value factor calculations to 5 decimal places, e.g. 1.25136 and final answers to 0 decimal places, e.g. 5,125.) v (a) V Your answer is correct. Prepare a Computation and Allocation Schedule for the difference between book value and the value implied by the purchase price in the consolidated statements workpaper on the acquisition date. (Round present value factor calculations to 5 decimal places, e.g. 1.25136 and final answers to 0 decimal places, e.g. 5,125.) Non- Parent Share Controlling Entire Value Share 490,500 1,962,000 Purchase Price and Implied Value 2,452,500 Book Value of Equity Acquired 1,774,400 Less 443,600 2,218,000 187,600 46,900 Difference between Implied and Book Value : 234,500 4,200 16,800 21,000 Land 8,316 41,578 33,262 Premium on Bonds Payable 51,016 Balance 204,062 255,078 51,016 Goodwill 204,062 255,078 Balance (b) Prepare the workpaper entries necessary on December 31, 2013, to allocate and depreciate the difference between book value and the value implied by the purchase price. (Round answers to 0 decimal places, e.g. 5,125. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Attempts: 0 of 4 used

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