Answered step by step
Verified Expert Solution
Question
1 Approved Answer
35. Consolidated net income and retained earnings-parent uses cost method pre-consolidation bookkeeping A parent company acquired 100 percent of the voting stock of a subsidiary
35. Consolidated net income and retained earnings-parent uses cost method pre-consolidation bookkeeping A parent company acquired 100 percent of the voting stock of a subsidiary on January 1, 2021, in exchange for $96,000. On the acquisition date, the subsidiary's stockholders' equity consisted of $60,000 of contributed capital and $14,400 of retained earnings. On the acquisition date, the subsidiary's identifiable net assets had fair values equal to their recorded values, except for property and equipment which had a fair value of $36,000 and a depreciated net carrying value of $24,000. The property and equipment had a remaining useful life of four years on the acquisition date. The parent company uses the cost method of pre-consolidation bookkeeping for the subsidiary. For the year ended December 31, 2022 (i.e., two-years after the acquisition date), the subsidiary reported $33,600 of net income and paid $6,000 of dividends. For the same year, the parent company recorded pre-consolidation net income of $41,400. On December 31,2022 , the parent company reported pre-consolidation retained earnings of $67,800. The subsidiary reported the following pre-consolidation stockholders' equity accounts: a. What is the [ADJ] consolidation entry necessary for the consolidation process for the year ended December 31, 2022? b. What is the amount of consolidated net income for the year ended December 31, 2022? c. What is the consolidated retained earnings balance on December 31,2022
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started