Part#4 - Consolidations (40 Points) The Blimp Rider Incorporated Acquired 100 percent of Parcel Parachute Corporation's common stock on September 30, 2012, by issuing 35,000 shares of its $1 par value common stock, which at the time of issuance had a fair market value of $20.00 per share. The Book Value of Parcel Parachute Corporation's Net Assets on September 30, 2012 is $435,000 Blimp Rider Incorporated uses the equity method for internal recordkeeping to monitor the activities of Parcel Parachute Corporation At the acquisition date, the carrying amounts of Parcel Parachute Corporation's assets and liabilities were generally equivalent to the fair value except for the following: Assets Liabilities Buildings (Net) Equipment(Net) Patents Loan Payable Book Value $300,000.00 $65,000.00 $0.00 ($250,000.00 Fair Value $390,000.00 $110,000.00 $55,000.00 ($275.000,00) R eaming Useful Life 25 Years 15 Years 10 Years 5 Years Part#4 - Subsection-4/Goodwill Calculation) Calculate the Goodwill attributed to Blimp Rider Inc.'s acquisition of Parcel Parachute Corp Subsequent to the acquisition Parcel Parachute Inc reported the following: 2012 2013 2014 Net Income $70,000.00 $71,000.00 $73,500.00 Dividends Declared $15,000.00 $16,000.00 $18,000.00 On December 31, 2014 Parcel Parachute Incorporated accounts payable included a $15,000 liability owed to Blimp Rider Incorporated Part#4 - Subsection-B/Consolidation Entries The following consolidated worksheet for Blimp Rider Incorporated and Parcel Parachute Corporation is to be used along with the information provided above to determine the consolidated entry balances "1)" through ")" below: Investments: Equity Method Blimp Rider Incorporated & Parcel Parachute Corporation Consolidated Worksheet For Year Ending December 31, 2014 Blimp Rider Parcel Parachute Consolidated Entries Incorporated Corporation Debit Credit Consolidated Totals Accounts Income Statement Sales Revenue Cost of Goods Sold Interest Expense Depreciation Expense Amortization Expense Equity in Investee Income Ner come ($3,500,000) $1,985,000 $105,000 $356,000 ($990,000) $550,000 $32,500 $25,000 SO 5.) 5.) 1.) (566,400) ($1,120.400) (5382,500) 2.) Statement of Retained Earnings Retained Earnings 11/14 Net Income Dividends Declared Retained Earnings 12/31/14 ($3,450,000) ($1,120,400) $325,000 ($4,245,400) ($343,750) (5382,500) $18,000 (5708,250) Balance Sheet Assets: Cash Inventory Supplies Accounts Receivable Investment In Parcel Parachute C. $1,245,000 $750,000 $985,000 $85,000 $808,275 $569,750 $91,000 $12,500 $25,000 $120,000 $300,000 $65.000 3.) $1,113,150 $1,800,000 $112,500 $251,975 $240,000 $7,390,900 $1,183,250 $8,013,650 Land Buildings (Net) Equipment(Net) Patents Goodwill Total Assets Liabilities: Salaries & Wages Payable Accounts Payable Loan Payable Total Liabilities Owners Equity: Common Stock Additional Paid In Capital Retained Earnings 12/31/14 Total Owners Equity Total Liabilities & Owners E. ($2,500) ($165,000) ($785,000) ($952 500) ($15,500) ($49,500) 6.) ($250,000). 5.) ($315,000) ($160,000) 2.) ($610,500) ($1,582,500) ($4,245,400) ($6,438,400) ($7,390,900) ($708,250) (5868.250) ($1.183.250) $895,125 - $895,125 ($8,013,650)
