Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Giant acquired all of Small's common stock on January 1, 2017 in exchange for cash of $770,000. On that day, Small reported common stock of

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Giant acquired all of Small's common stock on January 1, 2017 in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $60,500 of the fair-value price was attributed to undervalued land while $79,000 was assigned to undervalued equipment having a 10-year remaining life. The $60,500 unallocated portion of the acquisition date excess fair value over book value was viewed as goodwill. Over the next few years, Glant applied the equity method to the recording of this investment The following are individual financial statements for the year ending December 31, 2021. On that date, Smallowes Giant $12,900. Small declared and paid dividends in the same period. Credits are indicated by parentheses Giant Small Revenues $ (1,347,400) $ (423,000) Cost of goods sold 633,000 132,000 Depreciation expense 211,500 146,000 Equity in income of Small (137,1ee) Net income $ (640,000) $ (145, eee) Retained earnings, 1/1/21 $(1,680, eee) (702,00) Net income (above) (640,000) (145,000) Dividends declared 310, eee 1ee, eee Retained earnings, 12/31/21 $(2,010,000) $ (747,000 Current assets $ 485,500 38e, ece Investment in Small 1,077,500 521,000 181,000 Land 370, eee 466,000 Buildings (net) 698,eee 340, eee Equipment (net) Goodwill Total assets $ 3.152.ee $ $ @ $ 1.287.000 Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equities $ 3,152,000 $ 1,287,000 $ (892,800 $ (370,000) (250, eee) (170,000) (2,010,000) (747,000) $ (3,152,800) $ (1,287,800) a. How was the $137,100 Equity in Income of Small balance computed? b. Determine the totals to be reported by this business combination for the year ending December 31, 2021 c. Prepare a consolidation worksheet for Giant and Small for the year ending December 31, 2021. d. If Giant determined that the entire amount of goodwill from its investment in Small was impaired in 2021, what journal entry would Giant make to record such impairment? Complete this question by entering your answers in the tabs below. Required A Required B Required Required D How was the $137,100 Equity in Income of Small balance computed? Complete this question by entering your answers in the tabs below. Required a Required B Required Required D How was the $137,100 Equity in Income of Small balance computed? Equity accural Less: Amortization expense Equity in Income of Small $ Required A Required B Required c Required D Determine the totals to be reported by this business combination for the year ending December 31, 2021. (Input all amounts as positive values.) Totals Revenues Cost of goods sold Depreciation expense Income of Small Net income Retained earnings, 1/1/21 Dividends declared Retained earnings, 12/31/21 Current assets

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Mis And Edp Auditing For Accountants And Auditors

Authors: Srv

1st Edition

9993730351, 978-9993730354

More Books

Students also viewed these Accounting questions