Question
I do not understand how to get Operating Expenses. Assume a parent company acquired a subsidiary on January 1, 2XX1. The purchase price was $444,000
I do not understand how to get Operating Expenses.
Assume a parent company acquired a subsidiary on January 1, 2XX1. The purchase price was $444,000 in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date, and that excess was assigned to the following assets: Property, plant and equipment (PPE), net 396,000 Customer list 108,000 The [A] assets with definite useful lives have been depreciated or amortized as part of the parent's preconsolidation equity method accounting. Any remaining excess is allocated to Goodwill. The Goodwill asset has been tested annually for impairment, and has not been found to be impaired. Complete the consolidated income statement for the year ended December 31, 2XX5: Note: Use negatives to indicate items that reduce net income. Hint: in order to calculate AAP amortization, consider the relationship between Equity Income and the subsidiary's net income. Parent Subsidiary Income Statement Sales Cost of goods sold Gross profit Equity income Operating expenses Net income 51 480,000 84,000 (324,000) 5240.000 $312,000 (138,000) 174,000 (60,000) 5114,000 Consolidated s 2232,ooo (480,000) x
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