40. Determining ending consolidated balances in the second year following the acquisition Cost method Assume a parent company acquired a subsidiary on January 1, 2015, for $1,936,000. The purchase price was $816,200 in excess of the subsidiary's $1,119,800 book value of Stockholders Equity on the acquisition date. Of thi with a remaining economic useful life of 10 years, and $464,200 was assigned to Goodwill. On the acquisition date, the subsidiary reported retained earnings equal to $847,550. The parent uses the cost method of pre-consolidation Equity investment bookkeeping. The financial statements of the parent and its subsidiary for the year ended December 31, 2016, are as follows: Loa s excess purchase price, $352,000 was assigned to Property, plant and equipment Parent Subsidiary Income statement: Sales Parent Subsidiary .$8,318,750 $1,815,000 Assets Balance sheet 1,567.280 S 468,600 421,300 540,650 Gross profit. 2,329,250 37,400 2,462,900 3,226,850 ...1,936,000 Operating expenses (1.247,840)(471,900) Equity investment. Net income $1.118,810 254,100 Property, plant and equipment (PPE), net 17,189,920 ,000,450 $26,382,950 $2,431,000 Statement of retained earnings: BOY retained earnings.... $5,801,070 1,118,810 (262,570) 937,750 Liabilities and stockholders' equity 226,270 Ending retained earnings. . $6,657.310 $1.154.450 Long-term liabilities Common stock APIC ..10.587,500 605,000 21,000 51,250 775,060 5,697,890 $26,382,950 $2,431,000 Subsequent to the Date of Acu the consolidated financial s owing accounts appear on At what armount will the foll Property, plant and equipment (PPE), Det & Goodwill h. Common stock Sales b Investment income c. Operating expenses d. Inventories e Equity investment Retained earmings ated balances in the third year following the acquisit 40. Determining ending consolidated balances in the second year following the acquisition Cost method Assume a parent company acquired a subsidiary on January 1, 2015, for $1,936,000. The purchase price was $816,200 in excess of the subsidiary's $1,119,800 book value of Stockholders Equity on the acquisition date. Of thi with a remaining economic useful life of 10 years, and $464,200 was assigned to Goodwill. On the acquisition date, the subsidiary reported retained earnings equal to $847,550. The parent uses the cost method of pre-consolidation Equity investment bookkeeping. The financial statements of the parent and its subsidiary for the year ended December 31, 2016, are as follows: Loa s excess purchase price, $352,000 was assigned to Property, plant and equipment Parent Subsidiary Income statement: Sales Parent Subsidiary .$8,318,750 $1,815,000 Assets Balance sheet 1,567.280 S 468,600 421,300 540,650 Gross profit. 2,329,250 37,400 2,462,900 3,226,850 ...1,936,000 Operating expenses (1.247,840)(471,900) Equity investment. Net income $1.118,810 254,100 Property, plant and equipment (PPE), net 17,189,920 ,000,450 $26,382,950 $2,431,000 Statement of retained earnings: BOY retained earnings.... $5,801,070 1,118,810 (262,570) 937,750 Liabilities and stockholders' equity 226,270 Ending retained earnings. . $6,657.310 $1.154.450 Long-term liabilities Common stock APIC ..10.587,500 605,000 21,000 51,250 775,060 5,697,890 $26,382,950 $2,431,000 Subsequent to the Date of Acu the consolidated financial s owing accounts appear on At what armount will the foll Property, plant and equipment (PPE), Det & Goodwill h. Common stock Sales b Investment income c. Operating expenses d. Inventories e Equity investment Retained earmings ated balances in the third year following the acquisit
