Question
Hello. I need help with this homework question. The class is Advance Accounting 1. I would like a detail explaination of how toget to the
Hello.
I need help with this homework question. The class is Advance Accounting 1. I would like a detail explaination of how toget to the answer.
Problem 4-26 (LO 4-2, 4-7, 4-8)
Parker, Inc., acquires 70 percent of Sawyer Company for $420,000. The remaining 30 percent of Sawyer's outstanding shares continue to trade at a collective value of $174,000. On the acquisition date, Sawyer has the following accounts:
Book ValueFair ValueCurrent assets$210,000$210,000Land170,000180,000Buildings300,000330,000Liabilities(280,000)(280,000)
The buildings have a 10-year remaining life. In addition, Sawyer holds a patent worth $140,000 that has a five-year remaining life but is not recorded on its financial records. At the end of the year, the two companies report the following balances:
ParkerSawyerRevenues$(900,000)$(600,000)Expenses600,000400,000
- Assume that the acquisition took place on January 1. What figures would appear in a consolidated income statement for this year?
- Assume that the acquisition took place on April 1. Sawyer's revenues and expenses occurred uniformly throughout the year. What amounts would appear in a consolidated income statement for this year?
Thanks,
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