Shelton Corporation acquired all of the stock of Keller Comp

Shelton Corporation acquired all of the stock of Keller Company, at an acquisition cost of $30 million. Keller’s book value at the time was $10 million. Keller’s current assets and current liabilities were carried at amounts approximating fair value. However, its plant assets were overvalued by $6 million. Keller also has previously unreported developed technology valued at $4 million.

REQUIRED:

Prepare the work paper eliminating entries for this investment.

Solution

Date Description Debit Credit (E) Stockholders’ equity- Keller Co. $10,000,000.00 Investment in Keller co. $10,000,000.00 (R) Goodwill $22,000,000.00 Identifiable intangible assets $4,000,000.00 Investment in Keller co. $20,000,000.00 Plant Assets $6,000,000.00