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If you can complete any tab 2-5 I would greatly appreciate it. Parent company acquired 100 percent of Subsidiary's outstanding stock for $5,162,500 cash on
If you can complete any tab 2-5 I would greatly appreciate it.
Parent company acquired 100 percent of Subsidiary's outstanding stock for $5,162,500 cash on January 1, 2019. At the date of acquisition, Subsidiary's balance sheet was as follows: Cash 157,250 Receivables 348,500 Inventory 633,250 Land 382,500 Equipment (net) 956,250 Software 1,338,750 Liabilities (1,793,500) Common Stock (1,487,500) Retained Earnings (535,500) Certain assets and liabilities had fair values that differed from their book values. The fair values of these were as follows (note: this is not the difference between fair value and book value; this is the fair value): Land 340,000 Brand Name (indefinite life) 255,000 Software (2 year life) 1,763,750 IP R&D (10 vear life) 1,275,000 Other relevant information: Parent's 1/1/2020 retained earnings balance (excluding the effect of any 2019 subsidiary transactions/income) was $3,952,500. The subsidiary had net income of $318,750 and paid no dividends in 2019. There are no intercompany payables/receivables between Parent and Subsidiary. The companies' 12/31/2020 trial balances are as follows: Revenues (4,471,000) (1,814,750) Operating Expenses 3,489,250 1,113,500 Income of Subsidiary ? Net Income (981,750) (701,250) ? (854,250) Retained Earnings - Parent, 1/1/2020 Retained Earnings - Subsidiary, 1/1/2020 Net Income (above) Dividends Declared Retained Earnings, 12/31/2020 (701,250) 850,000 148,750 (1,406,750) 850,000 Cash 828,750 403,750 Receivables 1,049,750 607,750 Inventory 1,763,750 837,250 Investment in Subsidiary Co. ? Land 1,449,250 361,250 1,020,425 425,000 Equipment (net) Software Other Intangibles 1,326,000 616,250 Goodwill Total Assets 6,728,175 3,961,000 Liabilities (6,532,675) (1,066,750) Common Stock (2,125,000) (1,487,500) ? (1,406,750) Retained Earnings (above) Total Liabilities and Equity (8,657,675) (3,961,000) Fair Value Allocation Schedule Price Paid 6,162,500 Book Value (2,023,000) Excess initial value 4,139,500 Amortization to land (42,500) 2019 2020 to brand name 255,000 to software 425,000 212,500 212,500 to IPR&D 1,275,000 127,500 127,500 to goodwill 2,227,000 340,000 340,000 Subsidiary Retained Earnings Change Income Dividends 2019 318,750 2020 701,250 148,750 Required: Prepare an Excel workbook to consolidate Parent and Subsidiary's financial statements for 2020. The workbook should contain the following: Tab 1: The information contained on the previous page of these instructions, with the fair value allocation schedule completed. Tab 2: calculation of the 12/31/2020 balance of the Investment in subsidiary account (on Parent's books) using (1) the equity method, (2) the partial equity method, and (3) the initial value method. Also calculate Parent's 1/1/2020 retained earnings using each of these methods. Tab 2: A listing of all consolidation entries necessary under each of the respective methods (equity, partial equity, and initial value). Tab 3: Full consolidation worksheet using the equity method. Tab 4: Full consolidation worksheet using the partial equity method. Tab 5: Full consolidation worksheet using the initial value method. Parent company acquired 100 percent of Subsidiary's outstanding stock for $5,162,500 cash on January 1, 2019. At the date of acquisition, Subsidiary's balance sheet was as follows: Cash 157,250 Receivables 348,500 Inventory 633,250 Land 382,500 Equipment (net) 956,250 Software 1,338,750 Liabilities (1,793,500) Common Stock (1,487,500) Retained Earnings (535,500) Certain assets and liabilities had fair values that differed from their book values. The fair values of these were as follows (note: this is not the difference between fair value and book value; this is the fair value): Land 340,000 Brand Name (indefinite life) 255,000 Software (2 year life) 1,763,750 IP R&D (10 vear life) 1,275,000 Other relevant information: Parent's 1/1/2020 retained earnings balance (excluding the effect of any 2019 subsidiary transactions/income) was $3,952,500. The subsidiary had net income of $318,750 and paid no dividends in 2019. There are no intercompany payables/receivables between Parent and Subsidiary. The companies' 12/31/2020 trial balances are as follows: Revenues (4,471,000) (1,814,750) Operating Expenses 3,489,250 1,113,500 Income of Subsidiary ? Net Income (981,750) (701,250) ? (854,250) Retained Earnings - Parent, 1/1/2020 Retained Earnings - Subsidiary, 1/1/2020 Net Income (above) Dividends Declared Retained Earnings, 12/31/2020 (701,250) 850,000 148,750 (1,406,750) 850,000 Cash 828,750 403,750 Receivables 1,049,750 607,750 Inventory 1,763,750 837,250 Investment in Subsidiary Co. ? Land 1,449,250 361,250 1,020,425 425,000 Equipment (net) Software Other Intangibles 1,326,000 616,250 Goodwill Total Assets 6,728,175 3,961,000 Liabilities (6,532,675) (1,066,750) Common Stock (2,125,000) (1,487,500) ? (1,406,750) Retained Earnings (above) Total Liabilities and Equity (8,657,675) (3,961,000) Fair Value Allocation Schedule Price Paid 6,162,500 Book Value (2,023,000) Excess initial value 4,139,500 Amortization to land (42,500) 2019 2020 to brand name 255,000 to software 425,000 212,500 212,500 to IPR&D 1,275,000 127,500 127,500 to goodwill 2,227,000 340,000 340,000 Subsidiary Retained Earnings Change Income Dividends 2019 318,750 2020 701,250 148,750 Required: Prepare an Excel workbook to consolidate Parent and Subsidiary's financial statements for 2020. The workbook should contain the following: Tab 1: The information contained on the previous page of these instructions, with the fair value allocation schedule completed. Tab 2: calculation of the 12/31/2020 balance of the Investment in subsidiary account (on Parent's books) using (1) the equity method, (2) the partial equity method, and (3) the initial value method. Also calculate Parent's 1/1/2020 retained earnings using each of these methods. Tab 2: A listing of all consolidation entries necessary under each of the respective methods (equity, partial equity, and initial value). Tab 3: Full consolidation worksheet using the equity method. Tab 4: Full consolidation worksheet using the partial equity method. Tab 5: Full consolidation worksheet using the initial value methodStep by Step Solution
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