Question
Plastik Corporation acquired 80% of Seldane Corporation's common stock on January 1, 2009 for $210,000 cash. The stockholders' equity of Seldane at this time consisted
Plastik Corporation acquired 80% of Seldane Corporation's common stock on January 1, 2009 for $210,000 cash. The stockholders' equity of Seldane at this time consisted of $ 150,000 capital stock and $ 50,000 retained earnings . The difference between the price paid by Plastik and the underlying equity acquired in Seldane was due to a $ 8,500 undervaluation of Seldane's inventory , a $ 20,000 undervaluation of Seldane's equipment and goodwill The undervalued inventory items were sold by Seldane during 2009 and the undervalued equipment has a remaining useful life of five years . Straight line depreciation is used Seldane owed Plastic $ 6,000 on accounts payable at December 31, 2009The separate financial statements of Plastic and Seldane Corporation at and for the year ended December 31, 2009 are as follows (in thousands)
Plastik | Seldane | |||||
Sales | 200 | 110 | ||||
Income from Seldane | 22 | |||||
Cost of Sales | (80) | (40) | ||||
Depreciation expense | (40) | (20) | ||||
Other expense | (25.5) | (10.0) | ||||
Net income | 76.5 | 40 | ||||
Retained Earnings Jan 1 | 75 | 50 | ||||
Deduct Dividends | (40) | (20) | ||||
Retained Earnings Dec 31 | 111.5 | 70 | ||||
Cash | 29.5 | 30 | ||||
Trade receivables -net | 28 | 40 | ||||
Dividends receivables | 8 | |||||
Inventories | 40 | 30 | ||||
Land | 15 | 30 | ||||
Building -net | 65 | 70 | ||||
Equipment -net | 200 | 100 | ||||
Investment in Seldane | 216 | |||||
Total assets | 601.5 | 300 | ||||
Accounts payable | 40 | 50 | ||||
Dividends payable | 100 | 10 | ||||
Other liabilities | 50 | 20 | ||||
Capital stock , $10 par | 300 | 150 | ||||
Retained Earnings | 111.5 | 70 | ||||
Total Liab and Equity | 601.5 | 300 |
Required
a) Prepare Consolidated statements for Plastic and Seldane for the year ended
December 31,2009
b) Prepare all the investor entries made during the year
c) Prepare all consolidating /eliminating entries
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