3. Parent Company acquired 100% of Filia Inc. on January 31, 20x2 in exchange for cash. The book value of Filia's individual assets and liabilities approximated their acquisition-date fair values. On the date of acquisition, Filia reported the following: Cash $ 175,000 Current Liabilities $ 60,000 Inventory 50,000 Plant Assets (net) 160,000 Common Stock 50,000 Property 250,000 Retained Earnings 525.000 Total Assets $ 635.000 Total Liabilities & Equity$ 635,000 What were the entries made by the parent when they acquired Filia? What entries will be made to produce consolidated financials? How would your answer to the above change if Parent paid an additional $25,000 to purchase Filia? a. Refer to the info in #3. During the first year, the sub's income was 210,000 and they paid $15,000 in dividends. What is the value of the investment in sub at year-end? What income will parent report as income from sub? b. Parent purchases sub for $170,000. Sub's fmx = NAV except inventory + 10,000 and patent with a 5 yr life, +25,000. What is the differential? Goodwill? How will the differential affect the first year's income from sub? ABC c. Following are the financials for the parent and sub in B after one year of operations. Using this information, create the entries needed for consolidation and the consolidated financials. I/S SUB Sales $180,000 COGS (90,000) 90,000 PARENT $365,000 (220,000) 145,000 62,000 (45,000) (45,000) $ 117,000 Gross Margin Income from Sub Depreciation Exp Other Op expenses 0 (8,000) (5,000) Net Income $ 77,000 Statement of R/E Beginning R/E $ 30,000 $ 152,000 117,000 Net Income 77,000 Less Dividends (50.000 (47000) Ending R/E $ 219,000 $ 60,000 B/S Cash & Receivables $ 35,000 Investment in sub Inventory 50,000 Land 60,000 PP&E $ 80,000 (185,000) 60,000 100,000 136,000 $ 561,000 $ 92,000 50,000 200,000 52,000 Total Assets A/P $197,000 $ 47,000 20,000 Common Stock APIC 70,000 R/E 219,000 60,000 $197,000 Equity & Liabilities $ 561,000 3. Parent Company acquired 100% of Filia Inc. on January 31, 20x2 in exchange for cash. The book value of Filia's individual assets and liabilities approximated their acquisition-date fair values. On the date of acquisition, Filia reported the following: Cash $ 175,000 Current Liabilities $ 60,000 Inventory 50,000 Plant Assets (net) 160,000 Common Stock 50,000 Property 250,000 Retained Earnings 525.000 Total Assets $ 635.000 Total Liabilities & Equity$ 635,000 What were the entries made by the parent when they acquired Filia? What entries will be made to produce consolidated financials? How would your answer to the above change if Parent paid an additional $25,000 to purchase Filia? a. Refer to the info in #3. During the first year, the sub's income was 210,000 and they paid $15,000 in dividends. What is the value of the investment in sub at year-end? What income will parent report as income from sub? b. Parent purchases sub for $170,000. Sub's fmx = NAV except inventory + 10,000 and patent with a 5 yr life, +25,000. What is the differential? Goodwill? How will the differential affect the first year's income from sub? ABC c. Following are the financials for the parent and sub in B after one year of operations. Using this information, create the entries needed for consolidation and the consolidated financials. I/S SUB Sales $180,000 COGS (90,000) 90,000 PARENT $365,000 (220,000) 145,000 62,000 (45,000) (45,000) $ 117,000 Gross Margin Income from Sub Depreciation Exp Other Op expenses 0 (8,000) (5,000) Net Income $ 77,000 Statement of R/E Beginning R/E $ 30,000 $ 152,000 117,000 Net Income 77,000 Less Dividends (50.000 (47000) Ending R/E $ 219,000 $ 60,000 B/S Cash & Receivables $ 35,000 Investment in sub Inventory 50,000 Land 60,000 PP&E $ 80,000 (185,000) 60,000 100,000 136,000 $ 561,000 $ 92,000 50,000 200,000 52,000 Total Assets A/P $197,000 $ 47,000 20,000 Common Stock APIC 70,000 R/E 219,000 60,000 $197,000 Equity & Liabilities $ 561,000
