P4.8 Consolidation After Four Years On January 1, 2017, Perth Company acquired all of Sharbot Com- pany's voting stock for $16 million in cash. Some of Sharbot's identifiable assets at the date of acquisition had fair values that were different from reported values, as follows: > Fair value Book value (in millions) Plant assets, net (20-year remaining life, straight-line) Identifiable intangibles (5-year remaining life, straight-line). . $ 3 10 $11 0 Sharbot's total shareholders' equity at January 1, 2017, was $4 million. It is now December 31, 2020 (four years later). Cumulative impairment for the goodwill recognized on this acquisition, to the beginning of 2020, is $2 million. Goodwill impairment for 2020 is $0.5 million. Perth uses the complete equity method to account for its investment in Sharbot on its own books. December 31, 2020 trial balances for Perth and Sharbot appear below. Perth Company Dr (Cr) Sharbot Company Dr (Cr) (in thousands) $ 5,000 34,800 $ 2,500 28,000 Current assets Plant assets, net. Intangibles Investment in Sharbot Liabilities. .. Capital stock Retained earnings, Jan. 1.. Sales revenue. Equity in net income of Sharbot.. Cost of sales. Operating expenses.. 23,600 (22,000) (15,000) (25,000) (25,000) (400) 20,000 4,000 (10,000) (2,000) (16,000) (14,000) 8,000 3,500 Total. $ 0 $ 0 In your answers below, show all amounts in thousands. a. Required Prepare the working paper to consolidate Perth and Sharbot's trial balances at December 31, 2020. b. Prepare the consolidated income statement for 2020, and the consolidated balance sheet at December 31, 2020, in good form. P4.8 Consolidation After Four Years On January 1, 2017, Perth Company acquired all of Sharbot Com- pany's voting stock for $16 million in cash. Some of Sharbot's identifiable assets at the date of acquisition had fair values that were different from reported values, as follows: > Fair value Book value (in millions) Plant assets, net (20-year remaining life, straight-line) Identifiable intangibles (5-year remaining life, straight-line). . $ 3 10 $11 0 Sharbot's total shareholders' equity at January 1, 2017, was $4 million. It is now December 31, 2020 (four years later). Cumulative impairment for the goodwill recognized on this acquisition, to the beginning of 2020, is $2 million. Goodwill impairment for 2020 is $0.5 million. Perth uses the complete equity method to account for its investment in Sharbot on its own books. December 31, 2020 trial balances for Perth and Sharbot appear below. Perth Company Dr (Cr) Sharbot Company Dr (Cr) (in thousands) $ 5,000 34,800 $ 2,500 28,000 Current assets Plant assets, net. Intangibles Investment in Sharbot Liabilities. .. Capital stock Retained earnings, Jan. 1.. Sales revenue. Equity in net income of Sharbot.. Cost of sales. Operating expenses.. 23,600 (22,000) (15,000) (25,000) (25,000) (400) 20,000 4,000 (10,000) (2,000) (16,000) (14,000) 8,000 3,500 Total. $ 0 $ 0 In your answers below, show all amounts in thousands. a. Required Prepare the working paper to consolidate Perth and Sharbot's trial balances at December 31, 2020. b. Prepare the consolidated income statement for 2020, and the consolidated balance sheet at December 31, 2020, in good form
