3-33. (Determine parent company and consolidated account balances for a bargain purchase combination. Parent applies...
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3-33. (Determine parent company and consolidated account balances for a bargain purchase combination. Parent applies equity method) Brooks acquired 100% of Chandler stock on 1/1/2021 for $1,183,000. Consolidation is for January through December 2021. a. Acquisition-Date Fair Value Allocation Consideration transferred ............. $1,183,000 Chandler book value (given) .......... $1,105,000 Technology undervaluation (6 yr. life) 204,000 Acquisition-date fair value of net assets 1,309,000 Gain on bargain purchase.............. $(126,000) Because a bargain purchase occurred, Chandlers net asset fair value (acquisition date fair value of net assets) replaces the fair value of the consideration transferred as the initial value assigned to the subsidiary on the
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