#36

36. On January 1, 2014, Cayce Corporation acquired 100 percent of Simbel Company for con. sideration paid of $126,000, which was equal to fair value. Cayce is a U.S.-based company headquartered in Buffalo, New York, and Simbel is in Cairo, Egypt. Cayce accounts for its investment in Simbel under the cost method. Any excess of fair value over book value is attrib- utable to undervalued land on Simbel's books. Simbel had no retained earnings at the date of acquisition. Following are the 2015 financial statements for the two operations. Information for Cayce and for Simbel is in U.S. dollars (S) and Egyptian pounds (EE), respectively. Simbel Corporation $ 200,000 (93,800) (19,000) (7,000) (21,000) 13,750 Company EE 800,000 (420,000) (74,000) Sales . .. Cost of goods sold. . . Rent expense Dividend income-from Simbel (59,000) Gain on sale of fixed asset, 10/1/15 . . . Net income $ 72,950 EE 231,000 Retained earnings, 1/1/15 Net income... Dividends . $ 318,000 72,950 (24,000) $ 366,950 EE 133,000 Retained earnings, 12/31/15 Cash and receivables Inventory . .. Prepaid expenses Investment in Simbel (cost) Fixed assets (net) EE 314,000 EE 146,000 $ 110,750 98,000 30,000 126,000 398,000 Total assets Accounts payable Notes payable-due in 2017 Common stock Additional paid-in capital Retained earnings, 12/31/15 $ 762,750 S 60,800 132,000 120,000 366,950 $ 762,750 2 Total liabilities and equities