Question
On June 30, 2021, Plaster, Inc., paid $820,000 for 80 percent of Stucco Company's outstanding stock. Plaster assessed the acquisition-date fair value of the 20
On June 30, 2021, Plaster, Inc., paid $820,000 for 80 percent of Stucco Company's outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling interest at $205,000. At acquisition date, Stucco reported the following book values for its assets and liabilities:
Cash | $ | 53,800 | |
Accounts receivable | 113,800 | ||
Inventory | 181,800 | ||
Land | 58,200 | ||
Buildings | 156,700 | ||
Equipment | 268,700 | ||
Accounts payable | (31,400 | ) | |
(Parentheses indicate credit balances.)
On June 30, Plaster allocated the excess acquisition-date fair value over book value to Stucco's assets as follows:
Equipment (3-year remaining life) | $ | 67,400 |
Database (10-year remaining life) | 156,000 | |
At the end of 2021, the following comparative (2020 and 2021) balance sheets and consolidated income statement were available:
Plaster, Inc. December 31, 2020 | Consolidated December 31, 2021 | |||||||
Cash | $ | 38,400 | $ | 216,800 | ||||
Accounts receivable (net) | 323,300 | 433,300 | ||||||
Inventory | 370,600 | 642,800 | ||||||
Land | 267,900 | 326,100 | ||||||
Buildings (net) | 218,800 | 325,500 | ||||||
Equipment (net) | 1,607,500 | 1,826,000 | ||||||
Database | 0 | 148,200 | ||||||
Total assets | $ | 2,826,500 | $ | 3,918,700 | ||||
Accounts payable | $ | 71,400 | $ | 95,500 | ||||
Long-term liabilities | 357,000 | 1,076,460 | ||||||
Common stock | 1,606,500 | 1,606,500 | ||||||
Noncontrolling interest | 0 | 228,100 | ||||||
Retained earnings | 791,600 | 912,140 | ||||||
Total liabilities and equities | $ | 2,826,500 | $ | 3,918,700 | ||||
PLASTER, INC., AND SUBSIDIARY STUCCO COMPANY Consolidated Income Statement For the Year Ended December 31, 2021 | |||||||||
Revenues | $ | 1,087,400 | |||||||
Cost of goods sold | $ | 658,800 | |||||||
Depreciation | 167,600 | ||||||||
Database amortization | 7,800 | ||||||||
Interest and other expenses | 8,600 | 842,800 | |||||||
Consolidated net income | $ | 244,600 | |||||||
Additional Information for 2021
- On December 1, Stucco paid a $44,800 dividend. During the year, Plaster paid $92,000 in dividends.
- During the year, Plaster issued $719,460 in long-term debt at par.
- Plaster reported no asset purchases or dispositions other than the acquisition of Stucco.
Prepare a 2021 consolidated statement of cash flows for Plaster and Stucco. Use the indirect method of reporting cash flows from operating activities.
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