Over a 4 year period the black corp purchased 100% of the outstanding voting shares...
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Accounting
Over a 4 year period the black corp purchased 100% of the outstanding voting shares of White Co. The acquisition was made in a series of steps as follows:
DATE: % Purchase Price
Jan 1, Year 1 5% 5,000
Jan 1, Year 2 10% 12,000
Jan 1, Year 3 10% 15,000
Jan 1, Year 4 75% 200,000
Total 100% 232,000
Any excess of the purchase price over the net book value of the assets was attributed to goodwill.
The acquisition in Year 3 allowed Black to have significant influence over the operating policies of white.
The acquisition in Year 4 gave Black control over White.
Operating results, dividends paid and fair value of white for the 4 years were as follows:
Net Income Dividend Paid Fair Value
Jan 1 Year 1 100,000
Year 1 25,000 15,000 120,000
Year 2 30,000 15,000 150,000
Year 3 40,000 20,000 170,000
Year 4 50,000 25,000 250,000
For each of the 4 years compute the amount of income that will be recorded on Blacks books related to its investment in White Co. AND compute the balance in Investment in White Co. Account on Blacks books at December, 31 of each year
*SHOW ALL WORK*
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