Question
On Jan. 1 Year 1, P spent 250 million to buy 100% of S. At that date, some key numbers (in millions) are: S common
On Jan. 1 Year 1, P spent 250 million to buy 100% of S. At that date, some key numbers (in millions) are:
S common stock 15
S paid-in capital 20
S retained earnings 80
Total book equity = 115
All of the assets and liabilities of S had book values = fair values, exc8pt:
Intangible assets of S (book value = zero, but fair value = 30. Life = 5 years.
Building had book value = 120 but fair value = 130. Life = 10 years.
At the end of year 1, the books of the two companies reflect the following:
P | S | |||
Book value | Book value | |||
Cash | 300 | 63 | ||
Receivables (25 receivable by P from S) | 105 | 12 | ||
Inventory | 20 | 13 | ||
Land | 30 | 10 | ||
Buildings (net of deprec.) | 300 | 100 | ||
Investment in S | 269 | 0 | ||
Intangible assets | 26 | 0 | ||
Goodwill | 0 | 0 | ||
total assets | 1050 | 198 | ||
Accounts payable (25 payable by S to P) | 26 | 38 | ||
Accrued liabilities | 29 | 10 | ||
long-term bonds | 340 | 9 | ||
total liabilities | 395 | 57 | ||
Common stock of P, at par | 25 | |||
Common stock of S, at par | 15 | |||
Additional paid-in capital | 85 | 20 | ||
retained earnings (ending) | 545 | 106 | ||
total equity | 655 | 141 | ||
Total liabilities + equity | 1050 | 198 | ||
Revenues | 294 | 136 | ||
Expenses | 203 | 100 | ||
Income from subsidiary | 29 | |||
Dividends (S paid 10 to P) | 30 | 10 | ||
Beginning Retained earnings | 455 | 80 | ||
Ending retained earnings | 545 | 106 |
Give the correct consolidated balances at the end of Year 1 for:
6. Land
7. Receivables
8. Buildings, net of depreciation
9. Additional Paid-in capital
10. Investment in subsidiary
11. Goodwill
12. Amortization during year 1 related to any excess values at the acquisition date.
13. Total revenues
14. Consolidated net income
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