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P 4-2 Workpaper in Year of Acquisition Liam AB acquired Theo AB's 80 percent ownership on January 1, 2014 for $10,000,000, when Theo AB's stockholders'

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P 4-2 Workpaper in Year of Acquisition Liam AB acquired Theo AB's 80 percent ownership on January 1, 2014 for $10,000,000, when Theo AB's stockholders' equity consisted of $2,000,000 capital stock and $8,000,000 retained earnings.Theo AB's assets and liabilities book values were the same with the fair values during that period. The sepa- rate financial statements of Liam AB and Theo AB on December 31,2014 are as follows (in thousands): Liam AB Theo AB Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Theo AB Cost of sales Expenses $ 67,000 $30,500 $ 1,200 ($42,000) ($25,000) ($21,900) (S 4,000) S 4,300 1,500 $ 11,600 8,000 s 3,000 ($ 500) $ 12,900 $9.000 Net income Add: Beginning retained January 1 Deduct: Dividends Retained earnings December 31 Balance Sheet at December 31 Cash Accounts receivable-net Dividends receivable Inventories Other current assets Land Buildings-net Equipment-net Investment in Theo AB s 800 s 600 1,300 800 $400 $2,600 400 1,200 1,800 s3,000 $ 4,200 3,200 3,600 2,200 2,400 $10,800 $25,500 13,800 Total Assets P 4-2 Workpaper in Year of Acquisition Liam AB acquired Theo AB's 80 percent ownership on January 1, 2014 for $10,000,000, when Theo AB's stockholders' equity consisted of $2,000,000 capital stock and $8,000,000 retained earnings.Theo AB's assets and liabilities book values were the same with the fair values during that period. The sepa- rate financial statements of Liam AB and Theo AB on December 31,2014 are as follows (in thousands): Liam AB Theo AB Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Theo AB Cost of sales Expenses $ 67,000 $30,500 $ 1,200 ($42,000) ($25,000) ($21,900) (S 4,000) S 4,300 1,500 $ 11,600 8,000 s 3,000 ($ 500) $ 12,900 $9.000 Net income Add: Beginning retained January 1 Deduct: Dividends Retained earnings December 31 Balance Sheet at December 31 Cash Accounts receivable-net Dividends receivable Inventories Other current assets Land Buildings-net Equipment-net Investment in Theo AB s 800 s 600 1,300 800 $400 $2,600 400 1,200 1,800 s3,000 $ 4,200 3,200 3,600 2,200 2,400 $10,800 $25,500 13,800 Total Assets

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