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Posted on Jun 28, 2024

Owl Corporation acquired 90% of the voting stock of Hunt Corporation on January 1, 2004 for $7,000 when Hunt had Capital Stock of $5,000 and

Owl Corporation acquired 90% of the voting stock of Hunt Corporation on January 1, 2004 for $7,000 when Hunt had Capital Stock of $5,000 and Retained Earnings of $1,500. The excess of cost over book value was allocated $150 to inventories that were sold in 2004, $200 to undervalued land, $400 to undervalued equipment with a remaining useful life of 5 years under the straight-line method, and the remainder to goodwill. Financial statements for Owl and Hunt Corporations at the end of the fiscal year ended December 31, 2005 appear in the first two columns of the partially completed consolidation working papers. Owl has accounted for its investment in Hunt using the equity method of accounting. Owl Corporation owed Hunt Corporation $100 on open account at the end of the year. Dividends receivable in the amount of $450 payable from Hunt to Owl is included in Owl?s net receivables. Required: Complete the consolidation working papers for Owl Corporation and Subsidiary image text in transcribed

Problem foe Week 6 Owl Corporation acquired 90% of the voting stock of Hunt Corporation on January 1, 2004 for $7,000 when Hunt had Capital Stock of $5,000 and Retained Earnings of $1,500. The excess of cost over book value was allocated $150 to inventories that were sold in 2004, $200 to undervalued land, $400 to undervalued equipment with a remaining useful life of 5 years under the straight-line method, and the remainder to goodwill. Financial statements for Owl and Hunt Corporations at the end of the fiscal year ended December 31, 2005 appear in the first two columns of the partially completed consolidation working papers. Owl has accounted for its investment in Hunt using the equity method of accounting. Owl Corporation owed Hunt Corporation $100 on open account at the end of the year. Dividends receivable in the amount of $450 payable from Hunt to Owl is included in Owl's net receivables. Required: Complete the consolidation working papers for Owl Corporation and Subsidiary. Owl Corporation and Subsidiary Consolidated Balance Sheet Working Papers at December 31, 2005 Elimina NonConsolOwl Hunt tions Cntl idated Debit Credit INCOME STATEMENT Sales $ 10,000 Income from Hunt 1,270 Cost of Sales ( 4,000) Depreciation expense ( 1,000) Other expenses ( 1,800) Net income 4,470 Retained Earnings 1/1 2,510 Add: Net income 4,470 Less: Dividends ( 2,000) Retained Earnings 12/31 $ 4,980 BALANCE SHEET 1,440 Cash Receivables-net 1,550 Inventories 1,500 Land 1,000 Equipment and Buildings-net Investment in Hunt Corporation $ TOTAL ASSETS TOTAL ASSETS LIAB. & EQUITY Accounts Dividendspayable payable Capital Stock Retained EarningsEQUITY LIAB. & $ $ 6,500 ( ( ( 3,300) 1,000) 700) 1,500 2,000 1,500 ( 1,000) $ 2,500 1,900 600 1,200 600 7,500 27,590 0,580 2 3,000 5,700 $10,000 1,000 11,600 500 5,000 24,980 0,580 2,500 $10,000 2,000 Problem foe Week 6 Owl Corporation acquired 90% of the voting stock of Hunt Corporation on January 1, 2004 for $7,000 when Hunt had Capital Stock of $5,000 and Retained Earnings of $1,500. The excess of cost over book value was allocated $150 to inventories that were sold in 2004, $200 to undervalued land, $400 to undervalued equipment with a remaining useful life of 5 years under the straight-line method, and the remainder to goodwill. Financial statements for Owl and Hunt Corporations at the end of the fiscal year ended December 31, 2005 appear in the first two columns of the partially completed consolidation working papers. Owl has accounted for its investment in Hunt using the equity method of accounting. Owl Corporation owed Hunt Corporation $100 on open account at the end of the year. Dividends receivable in the amount of $450 payable from Hunt to Owl is included in Owl's net receivables. Required: Complete the consolidation working papers for Owl Corporation and Subsidiary. Owl Corporation and Subsidiary Consolidated Balance Sheet Working Papers at December 31, 2005 Elimina NonConsolOwl Hunt tions Cntl idated Debit Credit INCOME STATEMENT Sales $ 10,000 Income from Hunt 1,270 Cost of Sales ( 4,000) Depreciation expense ( 1,000) Other expenses ( 1,800) Net income 4,470 Retained Earnings 1/1 2,510 Add: Net income 4,470 Less: Dividends ( 2,000) Retained Earnings 12/31 $ 4,980 BALANCE SHEET 1,440 Cash Receivables-net 1,550 Inventories 1,500 Land 1,000 Equipment and Buildings-net Investment in Hunt Corporation $ TOTAL ASSETS TOTAL ASSETS LIAB. & EQUITY Accounts Dividendspayable payable Capital Stock Retained EarningsEQUITY LIAB. & $ $ 6,500 ( ( ( 3,300) 1,000) 700) 1,500 2,000 1,500 ( 1,000) $ 2,500 1,900 600 1,200 600 7,500 27,590 0,580 2 3,000 5,700 $10,000 1,000 11,600 500 5,000 24,980 0,580 2,500 $10,000 2,000 Problem foe Week 6 Owl Corporation acquired 90% of the voting stock of Hunt Corporation on January 1, 2004 for $7,000 when Hunt had Capital Stock of $5,000 and Retained Earnings of $1,500. The excess of cost over book value was allocated $150 to inventories that were sold in 2004, $200 to undervalued land, $400 to undervalued equipment with a remaining useful life of 5 years under the straight-line method, and the remainder to goodwill. Financial statements for Owl and Hunt Corporations at the end of the fiscal year ended December 31, 2005 appear in the first two columns of the partially completed consolidation working papers. Owl has accounted for its investment in Hunt using the equity method of accounting. Owl Corporation owed Hunt Corporation $100 on open account at the end of the year. Dividends receivable in the amount of $450 payable from Hunt to Owl is included in Owl's net receivables. Required: Complete the consolidation working papers for Owl Corporation and Subsidiary. Owl Corporation and Subsidiary Consolidated Balance Sheet Working Papers at December 31, 2005 Elimina NonConsolOwl Hunt tions Cntl idated Debit Credit INCOME STATEMENT Sales $ 10,000 Income from Hunt 1,270 Cost of Sales ( 4,000) Depreciation expense ( 1,000) Other expenses ( 1,800) Net income 4,470 Retained Earnings 1/1 2,510 Add: Net income 4,470 Less: Dividends ( 2,000) Retained Earnings 12/31 $ 4,980 BALANCE SHEET 1,440 Cash Receivables-net 1,550 Inventories 1,500 Land 1,000 Equipment and Buildings-net Investment in Hunt Corporation $ TOTAL ASSETS TOTAL ASSETS LIAB. & EQUITY Accounts Dividendspayable payable Capital Stock Retained EarningsEQUITY LIAB. & $ $ 6,500 ( ( ( 3,300) 1,000) 700) 1,500 2,000 1,500 ( 1,000) $ 2,500 1,900 600 1,200 600 7,500 27,590 0,580 2 3,000 5,700 $10,000 1,000 11,600 500 5,000 24,980 0,580 2,500 $10,000 2,000