Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please answer step by step with explanation thanks 39. Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1,
please answer step by step with explanation
39. Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $802.720 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest was assessed at $1,003,400 although Sierra's book value was only $690,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Book Value Fair Value $ 290,000 $ 65,000 Land Buildings and equipment (10-year remaining life). Copyright (20-year remaining life) Notes payable (due in 8 years) 287,000 122,000 (176,000) 263.000 216,000 (157,600) For internal reporting purposes, Padre, Inc., employs the equity method to account for this invest- ment. The following account balances are for the year ending December 31, 2018, for both companies Revenues Cost of goods sold Depreciation expense. Amortization expense Interest expense Equity in income of Sierra Net income Padre Sierra $(1,394,980) $ (684.900) 774,000 432.000 274.000 11.600 0 6.100 52.100 9,200 (177.120 $ (472,000) $ 226,000) -O (continued) (continued) Padre Sierra Retained earnings, 1/1/18 $(1.275.000) $ (530,000) Net income (472,000) (226,000) Dividends declared 260,000 65,000 Retained earnings, 12/31/18 $(1.487.000 $ (691.000) Current assets $ 856.160 $ 764.700 Investment in Sierra 927,840 --- Land 360,000 65.000 Buildings and equipment (net). 909.000 275,400 Copyright.. -0- 115.900 Total assets. $ 3.053.000 $ 1.22 1.000 Accounts payable $ (275,000) $ (194,000) Notes payable (541,000) (176,000) Common stock (300,000) (100,000) Additional paid-in capital (450,000) (60,000) Retained earnings (above) (1.487.000) (691,000 Total liabilities and equities $(3,053.000) $(1.221.000) At year-end, there were no intra-entity receivables or payables. Prepare a worksheet to consolidate the financial statements of these two companies. 40. Adams Corporation acquired 90 percent of the outstanding thanks
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started