Question
Liabilities and equity Current liabilities $25,000 $35,000 Share capital Retained carings Total liabilities and equity 150,000 1400,000 $575,000 50,000 65,000 $150,000 Fair values of Subsidiary
Liabilities and equity Current liabilities $25,000 $35,000 Share capital Retained carings Total liabilities and equity 150,000 1400,000 $575,000 50,000 65,000 $150,000 Fair values of Subsidiary were equal to book values except for buildings, which had a fair value of $100,000 in excess of net book value (remaining useful life of 10 years). Goodwill has hot been impaired since acquisition. No dividends were declared in X3. Profit for the year X3 for Parent and Subsidiary amounts to $90,000 and $35,000respectively. During X3, $50,000 of Subsidiary's sales were to Parent. Of these sales, $20,000 remains in the December 31, X3, inventories of Parent. The December 31, X2, inventories of Parent contained $10,000 of merchandise purchased from Subsidiary. Subsidiary's sales are priced to provide it with a gross profit of 10% (gross profit on sales). Continue the case of Parent Company in the subsequent ycar (X4). Assume that there are no intercompany transactions, no dividends, and no Goodwill impairment in X4. Profits for X4 were $200.000 (Parent) and $100,000 (Parent). What amount would Parent report as Retained Earnings in its consolidated F/S for X4? C $745,000 $715,000 $755,000 None of these answers
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