On January 1, 20X1 Papa Company acquired 100% of the outstanding common stock of Bambina Company for $500,000 in cash and by issuing to Bambina owners 30,000 shares of its common stock. The shares issued by Papa Company had $1 par value and were traded on the stock exchange for $25 a share on that date. Bambina reported net assets of 600,000 on the date of the acquisition. Some of Bambina assets were internally developed and were not reported on its books or had fair value that differed from it carrying value on the date of the acquisition as follow: Book Values 50,000 Trademarks (indefinite life) Patented Technologies (10 years) Equipment (5 years) Fair Values 200,000 150,000 410,000 450,000 Presented on the following page are the financial statements at the end of the first year of both companies prepared from their separately maintained accounting systems. Credit balances are indicated by parentheses. PAPA COMPANY AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 20X1 Consolidation Entries Debit Credit Consolidated Totals Revenues Cost of goods sold Depreciation Expense Amortization expense Income from Bambina Net income Papa Bambina Company Company 12/31/20X1 12/31/20X1 S (990.000) S (770.000) 550.000 490.000 120.000 90.000 70.000 (183.000) S (433.000) S (190,000) Retained earnings, 1/1/X1 Net income Dividends paid Retained earnings, 12/31/X1 S (880,000) $ (433,000) 90,000 S(1,223,000) $ (480,000) (190,000) 35,000 (635,000) $ Cash Receivables Inventory Investment in Bambina Company 205,000 $ 330,000 440,000 1,398,000 73,000 220,000 280,000 50.000 Trademarks Patented Technologies Equipment (net) Goodwill Total assets 160.000 320,000 630.000 412,000 S 3,483,000 $ 1,035,000 Liabilities Common stock S (810,000) $ (230,000) (280,000) (100,000) 50,000 Trademarks Patented Technologies Equipment (net) Goodwill Total assets 160.000 320,000 630,000 412,000 S 3.483.000 5 1,035,000 Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/X1 Total liabilities and equity S (810,000) $ (280,000) (230,000) (100,000) (1,220,000) (20,000) (1,223,000) (635,000) S(3,483,000) S (1,035,000) On January 1, 20X1 Papa Company acquired 100% of the outstanding common stock of Bambina Company for $500,000 in cash and by issuing to Bambina owners 30,000 shares of its common stock. The shares issued by Papa Company had $1 par value and were traded on the stock exchange for $25 a share on that date. Bambina reported net assets of 600,000 on the date of the acquisition. Some of Bambina assets were internally developed and were not reported on its books or had fair value that differed from it carrying value on the date of the acquisition as follow: Book Values 50,000 Trademarks (indefinite life) Patented Technologies (10 years) Equipment (5 years) Fair Values 200,000 150,000 410,000 450,000 Presented on the following page are the financial statements at the end of the first year of both companies prepared from their separately maintained accounting systems. Credit balances are indicated by parentheses. PAPA COMPANY AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 20X1 Consolidation Entries Debit Credit Consolidated Totals Revenues Cost of goods sold Depreciation Expense Amortization expense Income from Bambina Net income Papa Bambina Company Company 12/31/20X1 12/31/20X1 S (990.000) S (770.000) 550.000 490.000 120.000 90.000 70.000 (183.000) S (433.000) S (190,000) Retained earnings, 1/1/X1 Net income Dividends paid Retained earnings, 12/31/X1 S (880,000) $ (433,000) 90,000 S(1,223,000) $ (480,000) (190,000) 35,000 (635,000) $ Cash Receivables Inventory Investment in Bambina Company 205,000 $ 330,000 440,000 1,398,000 73,000 220,000 280,000 50.000 Trademarks Patented Technologies Equipment (net) Goodwill Total assets 160.000 320,000 630.000 412,000 S 3,483,000 $ 1,035,000 Liabilities Common stock S (810,000) $ (230,000) (280,000) (100,000) 50,000 Trademarks Patented Technologies Equipment (net) Goodwill Total assets 160.000 320,000 630,000 412,000 S 3.483.000 5 1,035,000 Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/X1 Total liabilities and equity S (810,000) $ (280,000) (230,000) (100,000) (1,220,000) (20,000) (1,223,000) (635,000) S(3,483,000) S (1,035,000)
