Polypipe Company acquired 80% of Svedex Company’s voting stock for $95,000 in cash. The noncontrolling interest had an estimated fair value of $20,000. Some of Svedex’s identifiable assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows: Book Value Fair Value Property, net $ 6,000 $ 4,000 Licensing agreements 1,000 25,000 Svedex’s total shareholders’ equity at the date of acquisition was as follows: Capital stock $5,000 Retained deficit (400) Treasury stock (50) Total $ 4,550
Polypipe Company acquired 80% of Svedex Company’s voting stock for $95,000 in cash. The noncontrolling interest had an estimated fair value of $20,000. Some of Svedex’s identifiable assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows: Book Value Fair Value Property, net $ 6,000 $ 4,000 Licensing agreements 1,000 25,000 Svedex’s total shareholders’ equity at the date of acquisition was as follows: Capital stock $5,000 Retained deficit (400) Treasury stock (50) Total $ 4,550
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Polypipe Company acquired 80% of Svedex Company’s voting stock for $95,000 in cash. The noncontrolling interest had an estimated fair value of $20,000. Some of Svedex’s identifiable assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
| Book Value | Fair Value | |
|---|---|---|
| Property, net | $ 6,000 | $ 4,000 |
| Licensing agreements | 1,000 | 25,000 |
Svedex’s total shareholders’ equity at the date of acquisition was as follows:
| Capital stock | $5,000 |
| Retained deficit | (400) |
| (50) | |
| Total | $ 4,550 |
On a date-of-acquisition consolidation working paper, eliminating entry (R) credits the noncontrolling interest in Svedex in the amount of
Select one:
a. $15,450
b. $18,600
c. $19,090
d. $20,000
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