Reference no: EM132750973

Question - On 1/1/20x1, Mt. Holly, Inc. paid $588,000 to acquire 100% of the outstanding common stock of Laurelton Corporation. Mt. Holly, Inc. will use the equity method to account for the investment.

At the acquisition date, Laurelton Corporation's pre-acquisition trial balance was:

Debits Credits

Cash and short-term investments 70,000

Accounts receivable 50,000

Supplies 20,000

Machinery and equipment, net 240,000

Buildings, net 140,000

Land 90,000

Intangible assets, indefinite life 110,000

Accounts payable 60,000

Long-term liabilities 180,000

Common stock 300,000

Additional paid-in capital 60,000

Retained earnings, 1/1/20x1 120,000

In addition, the fair value and remaining useful lives of the acquired noncurrent assets at acquisition were:

Land - $102,000,

Buildings (20 years) - $188,000, and

Machinery and equipment (8 years) - $216,000.

Previously unrecorded patent recognized at acquisition (10 years) - $72,000

During 20x1, Jackson reported net income of $96,000 while paying dividends of $12,000. During 20x2, Jackson reported net income of $132,000 while paying dividends of $36,000.

Required -

A. What is Mt. Holly Inc.'s acquisition of Laurelton Corporation at 1/1/20x1?

B. What is the schedule showing the amount of purchase price allocated to non-current assets, including periodic depreciation/amortizations of the related purchase price adjustments?

C. What is the amount of goodwill recorded at acquisition, if any?

D. Show the consolidation worksheet journal entries for fiscal year-ending 20x1?

E. Show the consolidating worksheet journal entries for fiscal year-ending 20x2?