Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $5.916,000 cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At ti acquisition date, Mathias's stockholders' equity was $2.010,000 including retained earnings of $1,510,00o. At the acquisition date. Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary: Consideration transferred Mathias stockholders' equity Excess fair over book value to unpatented technology (8-year remaining life) to patents (18-year remaining life) to increase long-tern debt (undervalued, 5-year renaining life) $5,916,000 2,010,e00 $3,906,000 $ 816, 000 2,520, e0e (110,000) 3,226,000 $ 680,000 Goodwill Postacquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the business combination, Mathias reports the following income and dividends:
Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $5.916,000 cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At ti acquisition date, Mathias's stockholders' equity was $2.010,000 including retained earnings of $1,510,00o. At the acquisition date. Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary: Consideration transferred Mathias stockholders' equity Excess fair over book value to unpatented technology (8-year remaining life) to patents (18-year remaining life) to increase long-tern debt (undervalued, 5-year renaining life) $5,916,000 2,010,e00 $3,906,000 $ 816, 000 2,520, e0e (110,000) 3,226,000 $ 680,000 Goodwill Postacquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the business combination, Mathias reports the following income and dividends:
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
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