Reference no: EM131302660
Questions:
On January 1, 2015, Polly Co. purchased all of the outstanding stock of Suzie Co. for $837,500 in consideration. The common stock, additional paid-in capital, and retained earnings of Suzie Co. were $125,000, $37,500, and $482,500, respectively, on the date of the acquisition. A trademark (with a 10-year remaining life) was undervalued by $15,000, and existing technology with a 5-year life was worth $45,000 at the date of acquisition. Any remaining excess fair value was allocated to goodwill.
The December 31, 2016 balances for Suzie Co. and Polly Co. were as follows:
|
Polly Co.
|
Suzie Co.
|
Revenues
|
(1,237,500)
|
(262,500)
|
Cost of Goods Sold
|
625,000
|
112,500
|
Depreciation Expense
|
125,000
|
6,250
|
Amortization Expense
|
68,750
|
22,500
|
Dividend Income
|
(50,000)
|
-
|
Net income
|
(468,750)
|
(121,250)
|
Retained earnings, 1/1/16
|
(1,943,750)
|
(562,500)
|
Net income
|
(468,750)
|
(121,250)
|
Dividends declared
|
312,500
|
50,000
|
Retained earnings, 12/31/16
|
(2,100,000)
|
(633,750)
|
Current assets
|
1,200,000
|
443,750
|
Investment in Polly Co.
|
837,500
|
-
|
Equipment (net)
|
956,250
|
281,250
|
Trademark
|
293,750
|
125,000
|
Existing technology
|
|
562,500
|
Goodwill
|
562,500
|
-
|
Total assets
|
3,850,000
|
1,412,500
|
Liabilities
|
(975,000)
|
(616,250)
|
Common Stock
|
(625,000)
|
(125,000)
|
Additional paid-in capital
|
(150,000)
|
(37,500)
|
Retained earnings, 12/31/16
|
(2,100,000)
|
(633,750)
|
Total liabilities and equity
|
(3,850,000)
|
(1,412,500)
|
Required:
Prepare an excel worksheet with 3 tabs.
1) A fair value allocation that shows the calculation of goodwill relative to the acquisition, and calculates the annual amount of amortization. (Hint: not all of the goodwill on Polly Co.'s balance sheet relates to its Suzie acquisition.)
2) A consolidating worksheet that shows the computation of the consolidated balances for Polly Co. and Suzie Co. as of December 31, 2016. Each consolidating journal entry should be labeled with its identifying letter.
3) A consolidating worksheet that simulates a goodwill impairment loss for 2016 (hint: only the amount of goodwill relating to the Suzie Co. acquisition is considered impaired.)
Who would stand to benefit from the repayment of debt
: Would it be smarter to pay off debt using the $15 million rather than executing a dividend or payback? Why or why not? Who would stand to benefit from the repayment of debt?
|
What is the standard deviation of your portfolio
: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.3%. What is the standard devia..
|
Globalization and the challenges of unemployment
: Although we aspire to attain a degree upon the completion of a dissertation, we also have to ensure our work influences or promotes social, practice, or organizational change. Take a few paragraphs to illustrate the value of your study and its met..
|
Fine tuning the economy with activist stabilization policy
: Does the reality that the Fed and the government must rely on "real-time data" that is subject to revisions weaken or strengthen the argument against fine-tuning the economy with activist stabilization policy? Explain.
|
Calculates the annual amount of amortization
: Prepare an excel worksheet with 3 tabs. A fair value allocation that shows the calculation of goodwill relative to the acquisition, and calculates the annual amount of amortization. (Hint: not all of the goodwill on Polly Co.'s balance sheet relat..
|
Outline and annotated bibliography
: Provide a strong thesis statement outlines the path that your project will follow. Remember to reflect on an argumentative point of view (through an assumption or myth)
|
What happens to output gap and to actual inflation rate
: Use an IS-MP model graph to show the effects of this change in the target for the federal funds rate. What happens to the output gap and to the actual inflation rate?
|
Virgin australia
: Using Examples from the Virgin Australia 2014 Annual Report discuss how Agency Costs are or may be being addressed by the management of Virgin Australia.
|
American society of public administration
: In 300 words. John Adams wrote in 1814 that, "democracy never lasts long. It soon wastes, exhausts and murders itself. There never was a democracy yet that did not commit suicide." Discuss how this viewpoint influenced the design of the U.S. feder..
|