Determining ending consolidated balances in the second year following the acquisition-Cost method Assume a parent company...
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Determining ending consolidated balances in the second year following the acquisition-Cost method Assume a parent company acquired a subsidiary on January 1, 2015, for $2,186,000. The purchase price was $1,066,200 in excess of the subsidiary's $1,119,800 book value of Stockholders' Equity on the acquisition date. Of this excess purchase price, $602,000 was assigned to Property, plant and equipment with a remaining economic useful life of 10 years, and $464,200 was assigned to Goodwill. On the acquisition date, the subsidiary reported retained earnings equal to $847,550. The parent uses the cost method of pre-consolidation Equity investment bookkeeping. The financial statements of the parent and its subsidiary for the year ended December 31, 2016, are as follows: Parent Subsidiary Parent Subsidiary Income statement Sales Balance sheet Cost of goods sold Gross profit Equity income Operating expenses $8,318,750 $1,900,000 Assets (5,989,500) (1,089,000) Cash 2,329,250 37,400 (1,247,840) $1,567,280 $468,600 811,000 Accounts receivable Inventory Net income $1,118,810 (556,900) Equity investment $254,100 Property, plant & equipment, net 2,462,900 421,300 3,476,850 540,650 2,186,000 Statement of retained earnings 17,189,920 1,000,450 $26,882,950 $2,431,000 BOY retained earnings 5,801,070 937,750 Liabilities and stockholders' equity Net income 1,118,810 254,100 Accounts payable $1,217,920 $173,030 Dividends (262,570) (37,400) Accrued liabilities 1,447,270 226,270 Ending retained earnings $6,657,310 $1,154,450 Long-term liabilities 10,587,500 605,000 Common stock 1,025,060 121,000 APIC Retained earnings 5,947,890 151,250 6,657,310 1,154,450 $26,882,950 $2,431,000 At what amount will the following accounts appear on the consolidated financial statements? Do not use negative signs with any of your answers. a. Sales $ 10,218,750 b. Investment income $ 0 c. Operating expenses $ 1,864,940 d. Inventories $ 4,017,500 e. Equity investment $ 0 f. Property, plant & equipment, net $ 18,671,970 g. Goodwill $ 464,200 $ 1,025,060 h. Common stock i. Retained earnings $ 0 Determining ending consolidated balances in the second year following the acquisition-Cost method Assume a parent company acquired a subsidiary on January 1, 2015, for $2,186,000. The purchase price was $1,066,200 in excess of the subsidiary's $1,119,800 book value of Stockholders' Equity on the acquisition date. Of this excess purchase price, $602,000 was assigned to Property, plant and equipment with a remaining economic useful life of 10 years, and $464,200 was assigned to Goodwill. On the acquisition date, the subsidiary reported retained earnings equal to $847,550. The parent uses the cost method of pre-consolidation Equity investment bookkeeping. The financial statements of the parent and its subsidiary for the year ended December 31, 2016, are as follows: Parent Subsidiary Parent Subsidiary Income statement Sales Balance sheet Cost of goods sold Gross profit Equity income Operating expenses $8,318,750 $1,900,000 Assets (5,989,500) (1,089,000) Cash 2,329,250 37,400 (1,247,840) $1,567,280 $468,600 811,000 Accounts receivable Inventory Net income $1,118,810 (556,900) Equity investment $254,100 Property, plant & equipment, net 2,462,900 421,300 3,476,850 540,650 2,186,000 Statement of retained earnings 17,189,920 1,000,450 $26,882,950 $2,431,000 BOY retained earnings 5,801,070 937,750 Liabilities and stockholders' equity Net income 1,118,810 254,100 Accounts payable $1,217,920 $173,030 Dividends (262,570) (37,400) Accrued liabilities 1,447,270 226,270 Ending retained earnings $6,657,310 $1,154,450 Long-term liabilities 10,587,500 605,000 Common stock 1,025,060 121,000 APIC Retained earnings 5,947,890 151,250 6,657,310 1,154,450 $26,882,950 $2,431,000 At what amount will the following accounts appear on the consolidated financial statements? Do not use negative signs with any of your answers. a. Sales $ 10,218,750 b. Investment income $ 0 c. Operating expenses $ 1,864,940 d. Inventories $ 4,017,500 e. Equity investment $ 0 f. Property, plant & equipment, net $ 18,671,970 g. Goodwill $ 464,200 $ 1,025,060 h. Common stock i. Retained earnings $ 0
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To determine the amounts that will appear on the consolidated financial statements we need to consider the parent companys financial statements and th... View the full answer
Related Book For
Fundamentals of Advanced Accounting
ISBN: 978-0077862237
6th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
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