Fairview Corporation, a US company, has a whollyowned subsidiary in Mexico. The subsidary's functional currency is the Mexican peso, and translation to US dollars is appropriate. The subsidiary was acquired for $ The balance sheet of the subsidiary on the date of acquisition is as follows:
Mexican Subsidiary
Balance Sheet at Date of Acquisition
Assets
Cash and receivables P
Inventories
Noncurrent assets, net
Total assets P
Liabilities and stockholders' equity
Liabilities P
Capital stock
Retained earnings
Total liabilities and stockholders' equity P
The fair values of the subsidiary's inventories are P and the fair values of the subsidiary's noncurrent assets are All other amounts are reported at approximate fair value. The exchange rate at the date of acquisition is $peso
Present a schedule showing the calculation of goodwill for the acquisition, in US dollars, and the entries necessary to consolidate the balance sheets of Fairview and its subsidiary at the date of acquisition.
Instructions:
Enter all your answers below in thousands. For example, P equals P in thousands.
Do not use negative signs with any of your answers below.
Calculation of goodwill in thousands
P $P US$
Price Paid Answer
Answer
Answer
Book value Answer
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Undervaluation of inventories Answer
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Overvaluationof noncurrent assets Answer
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Goodwill Answer
Answer
Enter answers in thousands.
ConsolidationJournal
Description Debit Credit
E
Answer
Answer
Answer
Retained earnings Answer
Answer
Answer
Answer
Answer
R
Answer
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Goodwill Answer
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Noncurrent Assets Answer
Answer
Answer
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