[cpa1234]

Becker Question –

I am going crazy because I cannot figure out where the $400,000 in APIC comes from when they find CAR for the acquisition date (at the end of the problem). Sorry the problem is long, but I wanted to include all the info in case I am actually missing something.

Here’s the problem:

On January 1, Year 1, Gearty Corporation (parent) acquired 100% of Olinto Corporation. Gearty Corp. issued 100,000 shares of its $10 par common stock, with a market price of $15 on the date the acquisition was announced and $25 on the date the acquisition was completed, for all of Olinto Corp.’s common stock.

On that date the fair value of Olinto Corp.’s assets and liabilities equaled their respective carrying amounts with the exception of land, which had a fair value that exceeded its book value by $200,000.

The fair value of Olinto Corp.’s identifiable intangibles (in process R&D) is $100,000. The in process R&D will be amortized over a useful life of eight years.

For the year ending December 31, Year 1, Olinto reported net income of $350,000 and paid cash dividends of $150,000.

The stockholders’ equity section of each company’s balance sheet as of December 31, Year 1, was:

Gearty
CS $5,000,000
APIC $1,000,000
RE $3,000,000
Total $9,000,000

Olinto
CS $1,000,000
APIC $500,000
RE $500,000
Total $1,900,000

Common Stock – Sub $1,000,000
APIC $400,000
RE $300,000

Solution for RE:
$500,000 (End RE) = X (Beg RE) + $350,000 – $150,000

Solution for CS:
Given

Solution for APIC:
???????????????

AUD - 83
BEC - 78
FAR - 76
REG - 79

BEC: 78 (May 2017)

FAR: 76 (Oct 2017)

AUD: 83 (April 2018)

REG: 79 (June 2018)

[Thats_LIFO]

I could not figure this out for the life of me either!! Plz send help!

BEC - 82 (5/30/17)

FAR - 78 (8/4/17)

AUD - 81 (9/10/17)

REG - 69 (11/29/17); Retake 1/2018

[FAR_SUCKS]

I just came across this as I'm going through F4 and cannot figure it out either. Maybe its an error in the text???

did either of you figure this out?

[Thats_LIFO]

I haven't figured it out but I had trouble with F4. I'm in the review phase, coming back to that chapter in a few days and hopefully it will make more sense….

BEC - 82 (5/30/17)

FAR - 78 (8/4/17)

AUD - 81 (9/10/17)

REG - 69 (11/29/17); Retake 1/2018

[FAR_SUCKS]

Its got to be an error because in the acquisition data eliminating entry, the debit to APIC is 400,000, whereas in the facts it says 500,000. so it should be 400,000 beginning APIC in the facts

[Author]

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