Question
Answers given. Please explain the calculations The following information applies: Huey Company acquires 100% of the stock of Solar Corporation on January 1, 2019, for
Answers given. 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.
34. What amount of Solar's land would be included on the consolidated balance sheet at December 31, 2020?
b. $ 900,000
35. What amount of Solars Bonds Payable would be included on the consolidated balance sheet at December 31, 2020?
b. $2,030,000
36. Compute the AAP amortization for 2020.
a. $ -0-
37. What amount of Solar's single legal entity stockholders' equity will be included in the consolidated balance sheet at date of acquisition?
a. $ -0-
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