Extra Credit (10 pts): On January 1, 2014, Cassandra Incorporated paid $300,000 for 60% of Hecuba Company's outstanding capital stock. Hecuba reported common stock on that date of $250,000 and retained

earnings of $100,000. On that date, • Hecuba's equipment with a 5-year remaining life was undervalued by $10,000; • Hecuba's buildings with a 10-year remaining life was undervalued by $60,000; • Any remaining fair value/book value differential is allocated to goodwill. The income statements for the year ended December 31, 2014 of Cassandra and Hecuba are summarized below: Sales Income from Hecuba Cost of sales Depreciation equipment Depreciation - buildings Net Income Cassandra I/S Hecuba I/S $1,000,000 $400,000 Hecuba's net income and dividends paid the first two years that Cassandra owned them are shown below. Net Income Dividends paid $80,000 $30,000 10,000 2014 2015 a. b. d. MUST SHOW your calculations for: 43,200 (400,000) (120,000) (200,000) $323.200 Required: 1) Prepare a schedule to assign the difference between the fair value of the investment in Hecuba and the book value of the interest to identifiable and unidentifiable net assets AND to amortize identifiable net assets for each of the two years. (200,000) (40,000) (80.000) $80,000 90,000 Total excess over book value calculation (both implied value and book value of 100% Hecuba) Assigned amounts for identifiable net assets and goodwill Amortization expenses for 12/31/14 AND unamortized excess on 12/31/14 Amortization expenses for 12/31/15 AND unamortized excess on 12/31/15

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