Income Statement was realized for the period after acquisition of Small by Big CH.3 Homework USE This In the period of operations Dividends Small to Big = $120,000 To Do: Prepare Consolidated Income Statement and Consolidated Balance Sheet of the Form set forth in the Excel Examples AND reflect changes due to amortizing FV adjustments Data Set Consolidating Balance Sheet Before operations Big Small Assets: $s $s debit Credit Consol. Cash 640,000 440,000 0 0 1,080,000 A/R 3,200,000 1,100,000 50,000 0 4,350,000 Inventory 2,100,000 1,450,000 0 3,550,000 Current Assets 5,940,000 2,990,000 8,980,000 Net PPE 4,400,000 1,800,000 120,000 0 6,320,000 Small Small Investments 2,750,000 0 0 2,750,000 0 Book FV Intangibles [patents & trademarks] 0 0 275,000 0 275,000 Intangibles Goodwill 110,000 0 75,000 0 185,000 Patents 0 120,000 Total Assets 13,200,000 4,790,000 15,760,000 Trademarks 0 185,000 Total intangibles 305,000 Current Liabilities 3,000,000 790,000 30,000 0 3,760,000 0 0 0 0 0 0 Long term Debt 2,900,000 1,800,000 0 0 4,700,000 Total Liabilities 5,900,000 2,590,000 8,460,000 Equity: Capital 6,300,000 1,800,000 1,800,000 0 6,300,000 Equity: Retained earnings 1,000,000 400,000 400,000 0 1,000,000 Total Equity 7,300,000 2,200,000 7,300,000 Total Liabilities & Equity 13,200,000 4,790,000 2,750,000 2,750,000 15,760,000 check 0 0 0 Fair Value adjustments are in the BS above Calculate enter whether Debit or credit FV Greater/(Less) Life Period amortzn.. Debit or Credit A/R 1 Net PPE 5 Inventory 1 Curr. Liab. 1 Patents 4 Trademarks Indefinite Goodwill N/A Total: Sum Consolidated Income Statement Consolidating entries Income statement Small Big Debit Credit Consolidated Net Revenue 1,590,000 4,050,000 CoGS 750,000 3,300,000 Gross Profit 840,000 750,000 Expenses 350,000 480,000 Small equity-Other (Income)/Expense 0 Income before tax 490,000 Taxes 85,000 130,000 Net Income 405,000 Show calculations for Small equity-Other (Income)/Expense Then enter into box E57 then Big Income before tax then Big Net Income Then do consolidating entries Then do consolidated Income statement Shown calculations [see Excel] First complete Big investments Then Big RE then Small Capital then Small RE then Total Equity Then use cash for both Big & Small to balance then CA and CL then Total Liabilties add A = L + Eq --- must balance After operations Consolidating Consolidating BIG PE Small PE Adjustments Adjustments Assets: $s $s Debit Credit Consolidated Cash Back into cash A/R 3,000,000 1,050,000 Inventory 2,100,000 1,400,000 Intangible: Customer contracts 0 0 Current Assets Net PPE 4,350,000 1,775,000 Investments 0 Intangibles [Patents/trademarks] 0 0 Goodwill 110,000 0 Total Assets Current Liabilities 3,100,000 795,000 0 0 Long term Debt 3,000,000 2,600,000 Total Liabilities 6,100,000 3,395,000 Equity: Capital 6,300,000 Equity: Retained earnings Total Equity Total Liabilities & Equity Check