accounting-Patterson Corporation acquired 80 percent of the 100,000 outstanding voting shares
On January 1, Patterson Corporation acquired 80 percent of the 100,000 outstanding voting shares of Soriano, Inc., in exchange for $31.25 per share cash. The remaining 20 percent of Sorianoâs shares continued to trade for $30.00 both before and after Pattersonâs acquisition. At January 1, Sorianoâs book and fair values were as follows:Book ValuesFair ValuesRemaining LifeCurrent assets80,00080,000Buildings and equipment1,250,0001,000,0005 yearsTrademarks700,000900,00010 yearsPatented technology940,0002,000,0004 years2,970,000Current liabilities180,000180,000Long-term notes payable1,500,0001,500,000Common stock50,000Additional paid-in capital500,000Retained earnings740,0002,970,000In addition, Patterson assigned a $600,000 value to certain unpatented technologies recently developed by Soriano. These technologies were estimated to have a 3-year remaining life. During the year, Soriano paid a $30,000 dividend to its shareholders. The companies reported the following revenues and expenses from their separate operations for the year ending December 31.PattersonSorianoRevenues3,000,0001,400,000Expenses1,750,000600,000a. What total value should Patterson assign to its Soriano acquisition in its January 1 consolidated balance sheet?b. What valuation principle should Patterson use to report each of Sorianoâs identifiable assets and liabilities in its January 1 consolidated balance sheet?c. For years subsequent to acquisition, how will Sorianoâs identifiable assets and liabilities be valued in Pattersonâs consolidated reports?d. How much goodwill resulted from Pattersonâs acquisition of Soriano?e. What is the consolidated net income for the year and what amounts are allocated to the controlling and noncontrolling interests?f. What is the noncontrolling interest amount reported in the December 31 consolidated balance sheet?g. Assume instead that, based on its share prices, Sorianoâs January 1 total fair value was assessed at $2,250,000. How would the reported amounts for Sorianoâs assets change on Pattersonâs acquisition-date consolidated balance sheet?
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