Assignment 1 On January 1, Year 4, Place Inc acquired an 80 percent interest in Setting Co. for 5800,000 cash. At that time. Setting's assets and abilities had carrying amounts equal to fair values, except for the following Inventory Planet and equipment Bonds payable Undervalued by $75,000 Undervalued by $50,00 Overvalued by $40,000 Turns over 6 times a year Romaining useful life 10 years Maturity date: December 31, Year 8 The premium discount on bonds payable is amortized on a straight line basis At January 1 Year 4. Setting had 100.000 common shares outstanding with a carrying amount of $550,000 and retained earnings of $50,000 The abbreviated financial statements of Place and Setting on December 31 Year. 6, are as follows Settina $1,555,000 STATEMENTS OF FINANCIAL POSITION Place plant and equipment (net) $1,250,000 Investment in Setting 300.000 Current assets 950.000 $3.000.000 Comon shares $1,000,000 1.500.000 ,00 $2.355.000 S50,000 75.000 300.000 $1,555,000 STATEMENTS OF FINANCIAL POSITION Place plant and equipment (net) $1,250,000 Investment in Setting 800,000 Current assets 958,eee 53, eee,000 Common shares $1,000,000 Retained earnings 1.500.000 10% bonds payable Curront liabilities 500,000 $3,000,000 800,000 $2,355,000 $ 550,000 725,000 300.000 20.000 $2,255,00 COMBINED INCOME AND RETAINED EARNINGS STATEMENTS Setting Sales $2,500,000 $900,000 Cost of goods sold 1280, 338,300 Expenses 400,000 220, Bee 1,680,000 558, 900,000 58.000 Het operating income Dividends received from Setting 100,000 Profit 1,200,000 358,800 Retained earnings, Jan. 1 Year 6 300, Geo 500,000 1,800,000 150,000 PW Which of the following is the correct adjustment to interest expense for the amortization of the bond fair value increment on Place's consolidated income statement for the year ended December 31, Year 42 Multiple Choice 0 55.000 decrease 0 S6400 incense 0 $8.000 decrease 0 $ 000 incent Assignment 1 On January 1, Year 4, Place Inc acquired an 80 percent interest in Setting Co. for 5800,000 cash. At that time. Setting's assets and abilities had carrying amounts equal to fair values, except for the following Inventory Planet and equipment Bonds payable Undervalued by $75,000 Undervalued by $50,00 Overvalued by $40,000 Turns over 6 times a year Romaining useful life 10 years Maturity date: December 31, Year 8 The premium discount on bonds payable is amortized on a straight line basis At January 1 Year 4. Setting had 100.000 common shares outstanding with a carrying amount of $550,000 and retained earnings of $50,000 The abbreviated financial statements of Place and Setting on December 31 Year. 6, are as follows Settina $1,555,000 STATEMENTS OF FINANCIAL POSITION Place plant and equipment (net) $1,250,000 Investment in Setting 300.000 Current assets 950.000 $3.000.000 Comon shares $1,000,000 1.500.000 ,00 $2.355.000 S50,000 75.000 300.000 $1,555,000 STATEMENTS OF FINANCIAL POSITION Place plant and equipment (net) $1,250,000 Investment in Setting 800,000 Current assets 958,eee 53, eee,000 Common shares $1,000,000 Retained earnings 1.500.000 10% bonds payable Curront liabilities 500,000 $3,000,000 800,000 $2,355,000 $ 550,000 725,000 300.000 20.000 $2,255,00 COMBINED INCOME AND RETAINED EARNINGS STATEMENTS Setting Sales $2,500,000 $900,000 Cost of goods sold 1280, 338,300 Expenses 400,000 220, Bee 1,680,000 558, 900,000 58.000 Het operating income Dividends received from Setting 100,000 Profit 1,200,000 358,800 Retained earnings, Jan. 1 Year 6 300, Geo 500,000 1,800,000 150,000 PW Which of the following is the correct adjustment to interest expense for the amortization of the bond fair value increment on Place's consolidated income statement for the year ended December 31, Year 42 Multiple Choice 0 55.000 decrease 0 S6400 incense 0 $8.000 decrease 0 $ 000 incent