On January 1, 2017, Posh Company buys 100% of the voting stock of Spice Inc. for $150 million in cash. After the acquisition, the trial balance of each company (in millions) at January 1, 2017, along with the fair value of Spice assets and liabilities and and their remaining useful lives, is: Trial Balance Spice Fair Value 9 Useful Lives Spice 9 Posh 46 150 25 14 (29) (38) (168) Current assets Investment in Spice Property and equipment, net Intangible assets Current liabilities Long-term debt Equity Total 38 16 6 years 5 years 26 21 (7) (8) (41) (7) (8) Goodwill resulting from the acquisition was $102 million. During 2017 Spice has net income of $10 million and pays dividends of $1 million. The pre-closing trial balance of each company in millions) at December 31, 2017 is: $ Current assets Investment in Spice Property and equipment, net Intangible assets Current liabilities Long-term debt Equity Dividends Sales revenue Cost of goods sold Operating expenses Equity in net income Total 2017 Posh Spice 52 $ 14 158 33 28 12 19 (31) (6) (35) (5) (168) (41) 1 (151) (127) 96 45 43 72 (9) $ $ Requirements: 1. Calculate equity in net income for Posh for 2017. 2. Prepare the equity method entries for the Posh books for 2017. 3. Prepare the 12/31/17 eliminating entries (C, E, R and O). 4. Prepare the consolidation working papers at December 31, 2017. 5. Prepare the consolidated income statement for 2017. 6. Prepare the consolidated balance sheet at December 31, 2017. On January 1, 2017, Posh Company buys 100% of the voting stock of Spice Inc. for $150 million in cash. After the acquisition, the trial balance of each company (in millions) at January 1, 2017, along with the fair value of Spice assets and liabilities and and their remaining useful lives, is: Trial Balance Spice Fair Value 9 Useful Lives Spice 9 Posh 46 150 25 14 (29) (38) (168) Current assets Investment in Spice Property and equipment, net Intangible assets Current liabilities Long-term debt Equity Total 38 16 6 years 5 years 26 21 (7) (8) (41) (7) (8) Goodwill resulting from the acquisition was $102 million. During 2017 Spice has net income of $10 million and pays dividends of $1 million. The pre-closing trial balance of each company in millions) at December 31, 2017 is: $ Current assets Investment in Spice Property and equipment, net Intangible assets Current liabilities Long-term debt Equity Dividends Sales revenue Cost of goods sold Operating expenses Equity in net income Total 2017 Posh Spice 52 $ 14 158 33 28 12 19 (31) (6) (35) (5) (168) (41) 1 (151) (127) 96 45 43 72 (9) $ $ Requirements: 1. Calculate equity in net income for Posh for 2017. 2. Prepare the equity method entries for the Posh books for 2017. 3. Prepare the 12/31/17 eliminating entries (C, E, R and O). 4. Prepare the consolidation working papers at December 31, 2017. 5. Prepare the consolidated income statement for 2017. 6. Prepare the consolidated balance sheet at December 31, 2017
