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Naomi Corporation acquired 7 5 % of the outstanding stock of Winnie, Inc., on January 1 , 2 0 1 9 , for $ 1
Naomi Corporation acquired of the outstanding stock of Winnie, Inc., on January for $ in cash. The remaining of Winnies stock traded actively at the same price as Naomi paid. The book value of Winne, Inc. at acquisition date was $ One of Winnies buildings, with a year remaining life, was undervalued in the companys accounting records by $ Also, Winnies newly developed patent, with an estimated year life, was assessed to have a fair value of $ During subsequent years, Winnie reports the following:
Net Income Dividends
$ $
$ $
$ $
The financial results for December are listed below for the two companies.
Naomi Winnie
BV BV
Revenues $$
Operating expenses
Investment income
Net income $$
Retained earnings, $$
Net income
Dividends declared
Retained earnings $$
Current assets $ $
Investment in subsidiary
Land
Buildings net
Equipment net
Total assets $ $
Liabilities $$
Common stock
Additional paidincapital
Retained earnings
Total Liabilities & equities $$
Required points
a Prepare a consolidation worksheet for this business combination.
b Prepare the consolidating entry C that would have been required if Naomi had used the initial value method for accounting for its investment in Winnie.
c Prepare the consolidating entry C that would have been required if Naomi had used the partial equity method for accounting for its investment in Winnie. formatted in excel sheet
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