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Assume, on January 1 , 2 0 1 8 , a parent company acquired a 9 0 % interest in its subsidiary. The total fair
Assume, on January
a parent company acquired a
interest in its subsidiary. The total fair value of the controlling and noncontrolling interest was $
over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following
A
assets:
A
Asset Initial
Fair Value
Useful Life
Property, plant, and equipment $
years
Customer list
years
Goodwill
Indefinite
$
of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre
consolidation financial statements at December
:
Parent Subsidiary Parent Subsidiary
Income statement: Balance sheet:
Sales $
Assets
Cost of goods sold
Cash $
$
Gross profit
Accounts receivable
Equity income
Inventory
Operating expenses
Equity investment
Net income
Property plant and equipment, net
Statement of retained earnings: $
$
Beginning retained earnings:
Liabilities and stockholders' equity
Net income
Current liabilities
Dividends
Long
term liabilities
Ending retained earnings $
$
Common stock
APIC
Retained earnings
$
$
b
Calculate and organize the profits and losses on intercompany transactions and balances.
No intercompany transactions
c
Compute the pre
consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary.
Equity investment account at
p
book value of subsidiary's net assets Answer
Unamortized p
AAP Answer
Answer
Equity investment account at
p
book value of subsidiary's net assets Answer
Unamortized p
AAP Answer
Answer
Equity Investment
Answer
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