Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2015 Finn Company spent $240,000 to acquire all Baylor Corporation's outstanding shares by paying $100,000 in cash and issuing 10,000 of its

image text in transcribedimage text in transcribed

On January 1, 2015 Finn Company spent $240,000 to acquire all Baylor Corporation's outstanding shares by paying $100,000 in cash and issuing 10,000 of its $1 par value common stock that was trading on the NYSE at $14 per share on that same date. The financial statements of the two companies were as follows on December 31, 2017 Finn Co Baylor Cor Income Statement Service Revenue Less: Cost of Services Less: Depreciation Expense Less: Other Expenses Income from Baylor Net Income 610,000 (470,000) (35,000) (57,000) 28,000 76,000 240,000 (130,000) (18,000) (60,000) 32,000 Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance Balance Sheet Cash Accounts Receivable Land Buildings & Equipment Investment in Baylor Corp 292,000 76,000 30,000 338,000 120,000 32,000 12,000 140,000 74,000 130,000 60,000 235,000 268,000 42,000 53,000 50,000 257,000 Total Assets Accounts Payable Taxes Payable Notes Payable Common Stock Retained Earnings Total Liabilities & Equity 767,000 71,000 58,000 100,000 200,000 338,000 767,000 402,000 17,000 60,000 85,000 100,000 140,000 402,000 Baylor Corporation reported retained earnings of $100,000 at the date of acquisition. The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of 10 years from the date of acquisition. Baylor owed Finn $10,000 as of December 31, 2017 Required. 1. Provide the journal entry recorded by Finn Corporation for its investment in Baylor for 2015 2. Provide the equity method journal entries recorded by Finn Corporation for its investment in 3. 4. Baylor for 2017 Prepare the consolidation entries for 2017 Prepare a consolidation worksheet for December 31, 2017

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

More Books

Students also viewed these Accounting questions