Jump to content


Photo
- - - - -

Question about Far Becker 06936

Consolidation

  • Please log in to reply
1 reply to this topic

#1 Lindadolphin

Lindadolphin

    Newbie

  • CPAnet Member
  • Pip
  • 2 posts

Posted 13 February 2014 - 11:04 PM

cpa-06936, Damon Co. purchsed 100% of the the CS of smith in an acquistion by issuing 20,000 shares of its$1 par common stock that had a fair value of $10 per share and providing contingent consideration that had a fair value of $ 10000 on acquisition da. Damon also incurred $15000 in direct acquisition costs. on the acquisition date, smith had assets with a book value of $200000 and fair value of $350000 and related liabiities with book and fair value $70000. what amout of gain should Damon report related to this transiction?

Answer is $70,000

 

Basically, the answer used th JEs:

 

CAR       130000

                          Investment          210000

B             150000

                           Gain                70000 

 

Why the CAR part was recorded as 130000?

Some one can help? Thank you.

 

 



#2 puffnation2009

puffnation2009

    Newbie

  • CPAnet Member
  • Pip
  • 1 posts

Posted 15 March 2014 - 12:04 AM

CAR is related to old owners' equity which equals to 200-170=30. any fair value adjustments is reflected in the B. 


  • Lindadolphin likes this