Problem 2-7 – 100% purchase, goodwill, limited adjustments, worksheet. Use the preceding information for Panteras purchase of Sader common stock. Assume Pantera purchased 100% of the common stock for $410,000. Pantera had the following balance sheet immediately after the purchase:
Pantera Company
Balance Sheet
January 1, 20X1
Assets Liabilities and Equity
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 51,000 Current liabilities . . . . . . . . . . . . . . . $ 80,000
Accounts receivable . . . . . . . . . . . . 65,000 Bonds payable . . . . . . . . . . . . . . . . 200,000
Inventory . . . . . . . . . . . . . . . . . . . . . 80,000 Common stock. . . . . . . . . . . . . . . . . 20,000
Land. . . . . . . . . . . . . . . . . . . . . . . . . 100,000 Paid-in capital in excess of par . . . . 180,000
Investment in Sader . . . . . . . . . . . . . 410,000 Retained earnings . . . . . . . . . . . . . . 446,000
Buildings . . . . . . . . . . . . . . . . . . . . . 250,000
Accumulated depreciation . . . . . . . (80,000)
Equipment . . . . . . . . . . . . . . . . . . . . 90,000
Accumulated depreciation . . . . . . . (40,000)
Total assets. . . . . . . . . . . . . . . . . . $926,000 Total liabilities and equity . . . . . . $926,000
1. Prepare a zone analysis and a determination and distribution of excess schedule for the
investment in Sader.
2. Complete a consolidated worksheet for Pantera Company and its subsidiary Sader Company
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Our educational standards today. A) are the highest in history. B) are much higher than they were 50 years ago. C) are the same as they were 50 years ago. D) are much lower than they were 50 years ago. 23. Brazil should be classified as a(n) A) very poor LDC. B) middle-rank LDC. C) NIC. D) industrial country. 24. The most important reason for our slow rate of productivity growth over the last three decades (of those listed below) is A) lagging business sales. B) foreign imports. C) our low savings rate. D) high tax rates. 25. Structural unemployment occurs when A) workers have quit one job and are looking for a better one. B) high school graduates enter the labor market every June. C) the business cycle is in a downturn and people are laid off. D) the people without jobs have skills that don't match the available job openings. 26. Unemployment caused by economic decline or recession is called A) frictional unemployment. B) cyclical unemployment. C) natural unemployment. D) necessary unemployment. E) structural unemployment.. 27. The recession of 2001 was caused by A) the events of 9/11. B) a decline in consumer spending. C) a decline in investment spending. D) the war in Iraq. 28. A budget deficit is the A) annual excess of government spending over revenue raised by taxes, fees, and charges. B) shortfall of Social Security collections toward payment of benefits. C) amount by which tax revenues and borrowed funds fall short of government expenditures. D) excess of tax revenues over expenditures. E) amount by which tax revenues exceed borrowed funds. 29. The consumer price index is created by A) calculating the cost of a "basket" of consumer goods typically bought by an American family in any year as a percentage of their cost in a base year. B) the Congressional Budget Office. C) averaging the price increases for all consumer goods in the GDP and adding 100. D) dividing nominal dollar consumer expenditures by base year consumer expenditures. 30. Statement I: When equilibrium GDP and full employment GDP are equal, there is no inflationary gap and no deflationary gap.Statement II: Equilibrium GDP is an ideal goal that can never be attained. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 31. When government expenditures in a given year are less than tax receipts, there exists A) a budget deficit. B) public revenue. C) full-employment taxation. D) a budget surplus .32. As price rises, the quantity ______________ rises. A) demanded B) supplied C) demanded and supplied 33. If the MPC were .75, what change in government spending (in billions of dollars) would be required to cause the equilibrium level of GDP to fall by 100? A) A decrease of 25. B) A decrease of 50. C) A decrease of 75. D) A decrease of 100. E) A decrease of 125. (I will send the image) 34. When price is $8 A) quantity demanded is greater than quantity supplied and, therefore, price must fall to get to equilibrium price. B) quantity demanded is greater than quantity supplied and, therefore, price must rise to get to equilibrium price. C) quantity supplied is greater than quantity demanded and, therefore, price must fall to get to equilibrium price. D) quantity supplied is greater than quantity demanded and, therefore, price must rise to get to equilibrium price. 35. Usury is considered the charging of A) higher interest rates than people are willing to pay. B) lower interest rates than people are willing to pay C) unconscionably high interest rates. D) extremely low rates of interest. 36. The present value of a dollar rises as A) the interest rate declines and the number of years you wait for your money declines. B) the interest rate rises and the number of years you wait for your money rises. 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Child poverty is A) much more of a problem in France, Germany, and Japan than it is in the U.S. B) less of a problem in the United States than in Canada, Britain, or Italy. C) more of a problem in Sweden, Denmark, and Ireland than it is in the U.S. D) much more of a problem in the U.S. than in virtually all other industrialized countries. 52. Statement I: Social Security payments help mostly the poor. Statement II: Poverty may be defined as a relative concept and as an absolute concept. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 53. Compared to their levels in 1999, the poverty line has ______ and the minimum hourly wage has ________. A) gone up; gone up B) stayed the same; stayed the same C) gone up; stayed the same D) stayed the same; gone up 54. In which year was the poverty rate the lowest? A) 1960 B) 1973 C) 1984 D) 1993 E) 2006 55. Which statement is true? 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- To Prof. Goodwill only.
- Prepare a fair value allocation and goodwill schedule at the date of the acquisition.
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