Question
Answers given. Can you please explain the calculations. The following information applies: Huey Company acquires 100% of the stock of Solar Corporation on January 1,
Answers given. Can you please explain the calculations.
The following information applies:
Huey Company acquires 100% of the stock of Solar Corporation on January 1, 2019, for $2,400,000 cash. As of that date Solar had the following account balances:
| Book Value | Fair value |
Cash | $300,000 | $300,000 |
Accounts receivable | 325,000 | 325,000 |
Inventory | 350,000 | $400,000 |
Building-net (10 year life) | 1,000,000 | 900,000 |
Equipment-net (5 year life) | 300,000 | 400,000 |
Land | 600,000 | 900,000 |
Accounts Payable | 125,000 | 125,000 |
Bonds Payable (Face amount $1,000,000; due 12/31/2023) | 2,000,000 | 2,050,000 |
Common stock | 700,000 |
|
Additional paid-in capital | 250,000 |
|
Retained earnings | 880,000 |
|
In 2019 and 2020, Solar had net income of $250,000 and $240,000, respectively. In addition, Solar paid dividends of $16,000 in both years. Inventory is assumed to be sold in 2019. Assume straight line amortization/ depreciation for assets and bonds payable.
30. Compute the AAP amortization for 2019.
a. $50,000
31. What amount of Solar's Bonds Payable would appear on the consolidated balance sheet at December 31, 2019?
b. $2,040,000
32. What amount of Solar's building would be included on the consolidated balance sheet at December 31, 2020?
c. $920,000
33. What amount of Solar's equipment would be included on the consolidated balance sheet at December 31, 2020?
c. $360,000
28. What amount of Solars building would be included on the consolidated balance sheet at December 31, 2019?
a. $990,000
b. $880,000
c. $890,000
d. $910,000
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