Preparing a consolidated balance sheet. The first two columns of Exhibit 13.14 present information from the accounting records of Company P and Company S on December 31, 2009. Company P acquired l00% of the common stock of Company S on January 1, 2008, when the balance in Company S retained earnings was $40,000. Company P attributes any excess of acquisition cost over the carrying value of the net assets of Company S to a building with a 10-year remaining life as of Janaury 1, 2008. Company P holds a note issued by Company S in the amount of $16,400 on December 31, 2009.

a. Enter the appropriate amounts in the Consolidated column for a consolidated balance sheet of Company P and Company S on December 31. 2009.
b. Compute the acquisition cost of Company P's investment in Company S on January 1, 2008.
c. Prepare an analysis that explains the changes in the Investment in Company S account between January 1, 2008, and December 31,2009.

Transcribed Image Text:

Company P and Company S Information from the Accounting Records on December 31 of the Current Year EXHIBIT 13.14 (Problem 29) Company P Company S Consolidated ASSETS $ 36,000 $ 26,000 Cash... Accounts and Notes Receivable. 180,000 50,000 Inventories . 440,000 250,000 Investment in Company S (using the equity method) 726,000 Property, Plant, and Equipment (net). 600,000 $1,982,000 424,000 Total Assets S750,000 LIABILITIES AND SHAREHOLDERS EQUITY $ 110,000 $ 59,000 Accounts and Notes Payable . Other Liabilities . 286,000 21,000 Common Stock. Additional Paid-In Capital Retained Earnings Total Liabilities and Shareholders' Equity. 1,200,000 500,000 100,000 70,000 $750,000 386,000 $1,982,000