Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2020, Prestige Corporation acqutred 100 percent of the voting stock of Stylene Corporation in exchange for $2356.000 in cash and securities. On

image text in transcribed
image text in transcribed
On January 1, 2020, Prestige Corporation acqutred 100 percent of the voting stock of Stylene Corporation in exchange for $2356.000 in cash and securities. On the acquisition date, Stylene had the following balance sheet Accounts payable $1,673,200 Cash Accounts receivable Inventory Equipment (net) Trademarks Total assets 36,200 99,000 214,000 1,550,000 998.000 $ 2,797,200 Common stock 800,000 Retained earnings 924.000 Total liabilities and equity $ 2,797,200 At the acquisition date, the book values of Stylene's assets and liabilities wore generally equivalent to their fair valuot except for the following assets: Remaining Asset Book Value Fair Value Useful Life Equipment $1,550,000 $ 1,700,000 8 year's Customer ist 161.000 4 year's Trademarks 898,000 962,00 Indefinite During the next two years. Stylene has the following income and dividends in its own separately prepared financial reports to its parent. 2020 2021 Net Income $216.000 1264,0 Dividends $ 25.000 45,00 Dividends are declared and paid in the same period. The December 31, 2021, separate financial statements for each company follow. Parentheses indicate credit balances. Income Statement Style Revenues $ (5,280,000) Cost of goods sold 2,984,00) Depreciation expense 2,640,000 2,110, 545,00 410, INN Anortization expense 183,000 Fouity earnings in Stylane 1414 089) Nur income (2.116,000) 5 (464.000 Statement of Retained farnings Retained earnings 1/1 $ (3,410,000 (1.115,60 Net Incore (above) (2,115,000) (44,000 Dividends declared 150 DB 45.000 Retained earnings 12/31 $(5.170,000 ${1,534,00) Balance Sheet 47, $ 65, Accounts receivable 212.00 be Teventory 941,00 482, Investment in Stylena 2,146, Euonent 6,610, 1,485, Customer lists 153,000 Trademarks 3.50. 924.ee Goodwill $ 15, 146,00 $ 1,041, Total assets Accounts payable (1.4/0.000 5 2010 Common stock (8.50 (00,00 Retained earnings 12/31 15.176.00 15. (15,106,00 5[3.11,000) Total liabilities and guity a. Determine the fair value in excess of book value for Prestige's acquisition date investment in Stylene b. Determine Prestige's December 31, 2021, Investment in Stylene balance c. Prepare a worksheet to determine the balonces for Prestiges December 31, 2021.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

Advanced Accounting

Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik

14th Edition

1260247821, 978-1260247824

More Books

Students also viewed these Accounting questions

Question

Who was chosen by delicates to leave the constitutional convention?

Answered: 1 week ago

Question

=+2. How can the revenue model of the music industry be described?

Answered: 1 week ago