Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On 1/1/2020, Company AAA purchased 80% of the shares of Company BBB for $ 5,000. On that date, Company BBB had shareholders' equity of capital

On 1/1/2020, Company AAA purchased 80% of the shares of Company BBB for $ 5,000. On that date, Company BBB had shareholders' equity of capital $ 3,000, additional paid-in capital $ 1,000, and retained earnings $ 1,000.

On 1/1/2020, Company BBB had overvalued inventory of $ 500 (all sold in 2020), undervalued land by $ 1,000, and undervalued equipment by $ 700 (7 years expected useful life).

The following are the statements of financial position for both companies at 31/12/2020.

In 2020, BBB declared dividends of $ 100 and had net income $ 1,000

31/12/2020

AAA

BBB

Dr.

Cr.

Consolidation

Cash

1,000

500

Accounts receivable

2,000

1,500

Dividends receivable

80

-

Inventory

500

1,000

Equipment

5,000

2,000

Buildings

10,000

1,000

Land

20,000

2,000

Investment in BBB

6,040

-

Goodwill

-

-

TOTAL

44,620

8000

Accounts payable

3,320

2,000

Dividends payable

-

100

Capital stock

25,000

3,000

Additional paid-in capital

10,000

1,000

Retained earnings

6,300

1,900

Noncontrolling interest

-

TOTAL

44,620

8,000

Required

As at 31/12/2020, compute the consolidated amount for the following , showing your detailed computations

1- The consolidated amount for cash

2- The consolidated amount for inventory

3- The consolidated amount for equipment

4- The consolidated amount for land

5- The consolidated amount for goodwill

6- The consolidated amount for accounts payable

7- The consolidated amount for dividends payable

8- The consolidated amount for additional paid in capital

9- The consolidated amount for noncontrolling interest

10- The total assets amount for the consolidated financial statements

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Government and Not for Profit Accounting Concepts and Practices

Authors: Michael Granof, Saleha Khumawala, Thad Calabrese, Daniel Smith

7th edition

1118983270, 978-1119175025, 111917502X, 978-1119175001, 978-1118983270

More Books

Students also viewed these Accounting questions

Question

Name different ways to handle budget variances.

Answered: 1 week ago