Consolidation Adjustments Consolidated Cash Accounts Receivable Inventory Other Current Assets IMPORTANT NOTE: Starting at cell A66 is the alternative format for constructing consolidated financial statements, like the format used in the textbook. You can use either format (A1 or Broadbent Industries Consolidated Financial Statements Statement of Financial Position Broadbent James Co. $ 5,700,000 $ 14,500,000 35,200,000 125,800,000 64,500,000 112,500,000 3,500,000 1,200,000 108,900,000 254,000,000 32,800,000 1,200,000 120,700,000 700,000 285,400,000 4,500,000 (87,500,000) (400,000) 351,400,000 6,000,000 124,500,000 26,000,000 56,000,000 18,500,000 6,000,000 256,500,000 Land Buildings Equipment Accumulated Depreciation Cassandra Co. $ 34,000,000 68,000,000 48,000,000 6,500,000 156,500,000 65,000,000 85,000,000 190,500,000 (48,500,000 292,000,000 76,000,000 106,000,000 3,500,000 A Intercompany Sales Transactions during the year: 1. Broadbent sold to James, $5,600,000 2. Broadbent sold to Cassandra, $2,800,000 3. James sold to Cassandra, $48,500,000 Intercompany sales are priced to provide the seller a 12.5% profit. Patents, net Goodwill Other Noncurrent Assets Investment in Subsidiaries B Intercompany Asset Transaction at end of the year: Broadbent sold a machine to James: Cost/Book Value = $900,000; Accumulated Depreciation = $75,000; Sales price = $450,000. Since sale was at end of year, no adjustment to depreciation expense is necessary. The purchase price was paid at the time of the transaction, no receivable/payable. = Total Assets $ 859,800,000 $ 348,000,000 $ 634,000,000 $ Accounts Payable Accrured Expense Liability Other Current Liabilities 48,000,000 $ 21,900,000 15,000,000 84,900,000 121,500,000 $ 87,500,000 18,000,000 227,000,000 96,500,000 80,500,000 21,500,000 198,500,000 C Broadbent charges James and Cassandra a management fee of $5,000,000 (same for both companies). Broadbent records the fee income as a reduction of Administrative Expense. James and Cassandra record the fee as Other Expense. Long-term Debt Deferred Income Taxes 334,400,000 85,600,000 61,000,000 12,500,000 198,000,000 28,500,000 D Intercompany receivables/payables (intercompany amounts are included in Accounts Receivable and Accounts Payable): 1. Broadbent has a receivable from James in the amount of $350,000; James has an equivalent payable. 2. James has a receivable from Cassandra in the amount of $8,500,000; Cassandra has an equivalent payable. Common Stock Additional Paid-In Capital Retained Earnings 5,200,000 24,700,000 325,000,000 354,900,000 500,000 7,500,000 39,500,000 47,500,000 500,000 21,000,000 187,500,000 209,000,000 Long-ton Debt Deferred Income Taxes 33-1.100.000 85.600.000 61,000,000 12.500.000 198,000,000 28,500,000 Ce Slack Additional Paid in Capital Reine linings D Intercompany receivables payables intercompany amounts are included in Accounts Receivable and Accounts Payuble): 1. Brxadient has a receivable from Tarnes in the amount of $350,000: Tunes has an equivalent payable 2. Jaunes has a receivable liron Cassandra in the unl of 88,500,000; Cassandra las an equivalent payable 5,200.000 24,700.000 325.000.000 354,900.000 500,000 7.500.000 39.500.00 47,500,000 500.000 21.000.000 187.500.000 209.000.000 Total Liabilities and Equity 5 859,800,000 $348.000.000 S 634.000.000 Broscheril Industries Consolidated Financial Statements Statement of Inoctite Broadbeut James Co. Cassandra Co. 560.000.000 S 750.000.000 S 952.000.000 E Profit in invectory 1. All of the inventory solde by Broadbeat to James and Cassadra has been sold to customers 2. $12,000,000 of the inventory sold by James to Cassandru has not been sold to customers (the other $36,500,000 was sold to customers) Jumes cost to produce that inventory was S10,500,000. Cassandra holds the inventory for sale, il cicles maladd any values to the inventory. Nct Sales Cost of Goods Sold 281.000.000 490,000,000 636,000,000 Gross Profit 280.000.000 260.000.000 316,000,000 ASSIGNMENT: Prepare conolidated statements (Statement of Financial Position and Statement of Income) taking into account the information items above, A through E. Administrative Expose Marketing and selling Expense Research and Development Expense Other Administrative lixpense 81,500,000 102.000.000 1:1.000.000 1.S0X1.000 98.000.000 131.500.000 9.500.000 5,600.000 68.000.000 122,000,000 65,000,000 1.200,000 Operating Income 81.000.000 15.100.000 59.800.000 Interest Expense Other Expense 13,500,000 2.500.000 2.800,000 3.500.000 8.900.000 8.500.000 Alternative formule at A66. Income Before Income Taxes 65,000,000 9.100.000 42.400.000 Income Tax Expense 12.500.000 2.200.000 7.500.000 Nel Incante $ 52.500.000 S 6.900.000 34.900.000 Dividends 0 0 Ending Retained Earnings $ 325,000,000 $ 39,500,000 $ 187,500,000 Cash Accounts Receivable Inventory Other Current Assets Broadbent Industries Consolidated Financial Statements Statement of Financial Position Broadbent James Co. $ 5,700,000 $ 14,500,000 35,200,000 125,800,000 64,500,000 112,500,000 3,500,000 1,200,000 108,900,000 254,000,000 32,800,000 1,200,000 120,700,000 700,000 285,400,000 4,500,000 (87,500,000) (400,000) 351,400,000 6,000,000 124,500,000 26,000,000 56,000,000 18,500,000 6,000,000 256,500,000 Land Buildings Equipment Accumulated Depreciation Cassandra Co. $ 34,000,000 68,000,000 48,000,000 6,500,000 156,500,000 65,000,000 85,000,000 190,500,000 (48,500,000) 292,000,000 76,000,000 106,000,000 3,500,000 Patents, net Goodwill Other Noncurrent Assets Investment in Subsidiaries Total Assets $ 859,800,000 $ 348,000,000 $ 634,000,000 $ Accounts Payable Accrured Expense Liability Other Current Liabilities 48,000,000 $ 21,900,000 15,000,000 84,900,000 121,500,000 $ 87,500,000 18,000,000 227,000,000 96,500,000 80,500,000 21,500,000 198,500,000 Long-term Debt Deferred Income Taxes 334,400,000 85,600,000 61,000,000 12,500,000 198,000,000 28,500,000 Common Stock Additional Paid-In Capital Retained Earnings 5,200,000 24,700,000 325,000,000 354,900,000 500,000 7,500,000 39,500,000 47,500,000 500,000 21,000,000 187,500,000 209,000,000 Total Liabilities and Equity $ 859,800,000 $ 348,000,000 $ 634,000,000