Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2018, Adora Inc. acquired 80% of the outstanding voting common stock of Alvah Inc. for $364,000. There is no active market for

On January 1, 2018, Adora Inc. acquired 80% of the outstanding voting common stock of Alvah Inc. for $364,000. There is no active market for Strongs stock. Of this payment, $28,000 was allocated to equipment (with a five-year life) that had been undervalued on Alvah's books by $35,000. Any remaining excess was attributable to goodwill, which has not been impaired.

As of December 31, 2018, before preparing the consolidated worksheet, the financial statements appeared as follows:

Adora Inc.

Alvah Inc.

Revenues

$

420,000

$

280,000

Cost of goods sold

(196,000

)

(112,000

)

Operating expenses

(28,000

)

(14,000

)

Net income

$

196,000

)

$

154,000

Retained earnings, 1/1/18

$

420,000

$

210,000

Net income (above)

196,000

154,000

Dividends paid

0

0

Retained earnings, 12/31/18

$

616,000

$

364,000

Cash and receivables

$

294,000

$

126,000

Inventory

210,000

154,000

Investment in Strong Corp

364,000

0

Equipment (net)

616,000

420,000

Total assets

$

1,484,000

$

700,000

Liabilities

$

588,000

$

196,000

Common stock

280,000

140,000

Retained earnings, 12/31/18 (above)

616,000

364,000

Total liabilities and stockholders equity

$

1,484,000

$

700,000

During 2018, Adora bought inventory for $112,000 and sold it to Alvah for $140,000. Only half of the inventory purchase price had been remitted to Adora by Alvah at year-end. As of December 31, 2018, 60% of these goods remained in the company's possession.

  1. What is the total of consolidated revenues?
  2. What is the total of consolidated operating expenses?
  3. What is the total of consolidated cost of goods sold?
  4. What is the consolidated total of noncontrolling interest appearing in the balance sheet?
  5. What is the consolidated total for equipment (net) at December 31, 2018?

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

Application Of Quantitative Techniques For The Prediction Of Bank Acquisition Targets

Authors: Pasiouras Fotios

1st Edition

9812565183, 9789812565181

More Books

Students also viewed these Accounting questions

Question

Explain the purposes of managing performance.

Answered: 1 week ago

Question

List 4 methods to evaluate training.

Answered: 1 week ago