Assignment Part B (30 Marks) Company Pacquired 80% of the outstanding common stock of Company S on 1 January 2014. The acquisition price included a $40,000 control premium. On the date of acquisition, an equipment was undervalued in the books of Company S. The equipment has a remaining useful life of 8 years. Also, on the date of acquisition, the retained earnings of Company Swere $370,000. The remaining excess fair value was attributed to Goodwill. Company Paccounted for the investment using the equity method. Between 1 January 2014 and 31 December 2018, the Investment in Company S account has increased by $155,468. Company S did not issue any new common stock during the period 2014-2018. On 1 January 2018, Company P reported $400,000 in bonds outstanding with a book value of $410,125. These bonds carry a coupon rate of 10%. Company Spurchased half of these bonds on the open market for $202,000 During 2018, Company P sold to Company Smerchandise inventory costing $200,000 at a price of $350,000. All but $20,000 of these goods were resold to outside parties by the end of 2018. Companys still owed $80,000 for inventory shipped from Company P during December. Company P has 500,000 common stock(shares) outstanding by the end of 2018. Ignore tax rate DO NO COPY, POST The following is selected financial statements for Company P and Company Sat 31 December 2018. Account Company P (5) Company S(S) Revenues 894,600 652,400 Cost of Goods Sold 483,000 277.200 Operating Expenses 187,600 225,400 Interest Expense - Bonds 36,910 NA Interest Income -Bond Investment NA 18,180 Equity in Company S Income ?? NA Net Income ?? RE @ 1 January 2018 307,200 505,400 Dividends Paid 217,000 87,170 RE @ 31 December 2018 ?? ?? Cash & Receivables 186,200 111,200 Inventory 239,400 121.800 Investment in Company S 715,468 NA Investment in Company P Bonds NA 483,335 695,430 Land, Buildings & Equipment(net) Accounts Payable Bonds Payable Premium on Bonds Payable Common Stock Sale 389,194 400,000 ?? 420,000 232,400 140,000 NA 170,000 Required: Using a worksheet format, prepare the consolidated Income Statement, The Consolidated Statement of Retained Earnings and the Consolidated Balance sheet for the year 2018, [Show all your calculations] DOT Assignment Part B (30 Marks) Company Pacquired 80% of the outstanding common stock of Company S on 1 January 2014. The acquisition price included a $40,000 control premium. On the date of acquisition, an equipment was undervalued in the books of Company S. The equipment has a remaining useful life of 8 years. Also, on the date of acquisition, the retained earnings of Company Swere $370,000. The remaining excess fair value was attributed to Goodwill. Company Paccounted for the investment using the equity method. Between 1 January 2014 and 31 December 2018, the Investment in Company S account has increased by $155,468. Company S did not issue any new common stock during the period 2014-2018. On 1 January 2018, Company P reported $400,000 in bonds outstanding with a book value of $410,125. These bonds carry a coupon rate of 10%. Company Spurchased half of these bonds on the open market for $202,000 During 2018, Company P sold to Company Smerchandise inventory costing $200,000 at a price of $350,000. All but $20,000 of these goods were resold to outside parties by the end of 2018. Companys still owed $80,000 for inventory shipped from Company P during December. Company P has 500,000 common stock(shares) outstanding by the end of 2018. Ignore tax rate DO NO COPY, POST The following is selected financial statements for Company P and Company Sat 31 December 2018. Account Company P (5) Company S(S) Revenues 894,600 652,400 Cost of Goods Sold 483,000 277.200 Operating Expenses 187,600 225,400 Interest Expense - Bonds 36,910 NA Interest Income -Bond Investment NA 18,180 Equity in Company S Income ?? NA Net Income ?? RE @ 1 January 2018 307,200 505,400 Dividends Paid 217,000 87,170 RE @ 31 December 2018 ?? ?? Cash & Receivables 186,200 111,200 Inventory 239,400 121.800 Investment in Company S 715,468 NA Investment in Company P Bonds NA 483,335 695,430 Land, Buildings & Equipment(net) Accounts Payable Bonds Payable Premium on Bonds Payable Common Stock Sale 389,194 400,000 ?? 420,000 232,400 140,000 NA 170,000 Required: Using a worksheet format, prepare the consolidated Income Statement, The Consolidated Statement of Retained Earnings and the Consolidated Balance sheet for the year 2018, [Show all your calculations] DOT
