Please determine consolidated net income and consolidated retained earnings
Customs Prepare consolidation spreadsheet for continuous sale of inventory-Cost method A parent company acquired 100 percent of the stock of a subsidiary company on January 1, 2013, for $900,000. On this date, the balances of the subsidiary's stockholders equity accounts were Common Stock $50,000, Additional Paid in Capital $55,000, and Retained Earnings, $195,000. On the acquisition date, the excess was assigned to the following AP assets: Original Amount Ontral Untul Life Property, plante me 270.000 170,000 Royalty agreement 150.000 Goodwill 120,000 Indefinite The Goodwill asset has been tested annual for pairment and has not been found to be impaired Assume that the parent company sells inventory to its whally coined subsidiary. The subsidiary, ultimately. still the inventory to customers outside of the consolidated group. You have compiled the following data for the years ending 2015 and 2016 Inventory Gross Profit Remaining in Recente Sales Unseld Inventory 2016 $44.000 2015 $64.000 $14500 The inventory not remaining at the end of a given year is sold to unaffiliated entities outside of the consolidated group during the next year. The parent uses the cost method of pre-consolidation Equity Investment bookkeeping The inventory not remaining at the end of a given year is sold to unaffiliated enoties outside of the consolidated group during the next year. The parent uses the cost method of pre-consolidation Equity Investment bookkeeping The financial statements of the parent and its subsidiary for the year ended December 31, 2016, follow Parent Subsidiary Parent Subsidiary Income statement Balance sheet 34.000 100.000 Cost of gold 100.000 40.000 1650,000 $320,000 Grouprot 0.000 120.000 Acrescevabu 0.000 180,000 Incomenda 15.00 Ivory 50.000 Operating 1.000 200.000) Bly went 0.000 Netcon 345.000 $120.000 Properto 4.000.000 120.000 Statement of retained earnings 1220000059120,000 Dodanie 12.000.000 $478.000 abits and storey Metcon 45.000 120.000 Ale 550.000 $100,000 Die 12.000 15.000 other 400.000 125,000 12. LOL 2.000.000 200.000 Cum 0.000 50.000 APK 55.000 Head 2.000 500,000 52.000 5.170.000 N000 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (NAP through December 31, 2016 Year ended December 31 101 AA Amortization or 2014 2015 2016 Property puntament 27.000 3 37.000 27.000 27.000 Cantot 21250 21250 Bally Good 0 0 Net $2.000 57.000 52.000 57.000 21.250 21250 170 1 December 31 100% Usmond AAP.Dr. 200 2013 2016 2015 2016 Property and equipment (270,000 V 243.000 3 216.000 100.000 VS 162.000 Com 120.000 750 127500 106.250 85.000 Royalty 150,000 131.25 112.500 93.750 75.000 Godell 120,000 $20,000 120.000 120,000 120.000 Need 710 63.000 156.000 500.000.000 b. Compute the amount of the beginning of year son adjustment necessary for the comodation of the financial statements for the year ended December 31, 2016 Do not use negatives with your below. COY Cum er tvu BOY 201000 BOYIP 1450 ADA 500 0 0 0 0 0 0 0 0 0 C. Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet. Consolidation Journal Description Debit Credit [AD] Equity investment 64,500 BOY Retained earnings-Parent 64,500 IC) Income (loss) from subsidiary 15,000 0 Dividends 15,000 [E] BOY Common stock (Subsidiary) 50,000 BOY APIC (Subsidiary) 55,000 0 BOY Retained earnings-Subsidiary 475,000 Equity investment 580,000 (A) PPE, net 189,000 Customer list 106,250 Royalty Agreement 93,750 Goodwill 120,000 Equity investment 509,000 [D] Operating expenses 67,000 PPE, net 27,000 Customer List 21,250 Royalty Agreement 18,750 [icogs] Equity investment 14,500 Cost of goods sold 14,500 To recognize prior year profit on intercompany sales. [lsales] Sales 44,000 Cost of goods sold 44,000 [lcogs) Cost of goods sold 12,000 Inventory 12,000 To defer current period profit on intercompany sales. Dipayl Accounts payable 32,000 Accounts receivable 32,000 44) 0 0 > 0 0 0 0 (0) 0 4 0 0 0 0 0 0 Use negative signs with answers in the Consolidated column for Cost of goods sold, Operating expenses and Dividends. Consolidation Worksheet Income statement Parent Subsidiary Debit Credit Consolidated Sales $4,350,000 $800,000 (sales) 44,000 $ 5,106,000 Cost of goods sold (3,050,000) (480,000) icogs) 12,000 14,500 ficogs (3,483,500) 44,000 (sales) Gross profit 1,300,000 320,000 1.622.500 Equity income 15,000 [C] 15,000 0 Operating expenses (830,000) (200,000) ID 67,000 (1,097,000) Net income $485.000 $120,000 $ 525,500 Statement of retained earnings BOY retained earnings $2,000,000 $475,000 [E] 475,000 64,500 [ADD] $ 2,064,500 Net income 485.000 120,000 593,000 X Dividends (125,000) (15,000) 15,000 C (125,000) Ending retained earnings $2,360,000 $580,000 $ OX Balance sheet Assets Cash $650,000 $320,000 $ 970,000 Accounts receivable 560,000 180,000 32,000 payl 708,000 Inventory 850,000 250,000 12,000 icogs) 1,088,000 Equity investment 1,010,000 TAD] 64.500 580,000 LEI 0 [icogs! 14,500 509,000 A PPE.net 4,000,000 420,000 IA 189,000 27,000 (0) 4,582,000 Customer List IAI 106,250 21,250 ID 85,000 Royalty Agreement IA 93,750 18,750D 75,000 Goodwill IA 120,000 120,000 $7.070.000 $1.170.000 $ 7,628,000 Liabilities and equity Accounts payable $350.000 $100,000 payl 32,000 $ 418.000 Other currentliabilities 400,000 125,000 525.000 Long term liabilities 2.500,000 260,000 2.760,000 (C) [D) 15,000 67,000 (200,000) $120,000 (1,097,000) $ 525,500 [E] 475,000 64,500 [AD] Equity income 15,000 Operating expenses (830,000) Net income $485.000 Statement of retained earnings BOY retained earnings $2,000,000 Net income 485,000 Dividends (125,000) Ending retained earnings $2.360,000 Balance sheet Assets Cash $650,000 Accounts receivable 560,000 Inventory 850,000 Equity Investment 1,010,000 $475,000 120,000 (15,000) $580,000 $ 2,064,500 593,000 x (125,000) 5 OX 15,000 (0) $320,000 180,000 250,000 $ 970,000 708,000 1,088,000 0 4,000,000 32,000 tipay] 12,000 [cogs 580,000 (E) 509,000 Al 27,000 (D) 21,250[D] 18,750D 420,000 [AD] [icogs] (A) TA) [A] [A] PPE, net Customer List Royalty Agreement Goodwill 64,500 14,500 189,000 106,250 93,750 120,000 4,582,000 85,000 75,000 120,000 $ 7,628,000 $7,070,000 $1,170,000 32,000 $ Liabilities and equity Accounts payable Other currentliabilities Long-term liabilities Common stock APIC Retained earnings $350,000 $100,000 payl 400,000 125,000 2,500,000 260,000 700,000 50,000 IE) 760,000 55,000 [E] 2,360,000 580,000 $7,070,000 $1,170,000 418,000 525,000 2,760,000 700,000 760,000 50,000 55,000 0 X $ 1,338,000 $1,338,000 $ OX (C) [D) 15,000 67,000 (200,000) $120,000 (1,097,000) $ 525,500 [E] 475,000 64,500 CAD Equity income 15,000 Operating expenses (830,000) Net income $485,000 Statement of retained earnings BOY retained earnings $2,000,000 Net income 485,000 Dividends (125,000) Ending retained earnings $2,360,000 Balance sheet Assets Cash $650,000 Accounts receivable 560,000 Inventory 850,000 Equity Investment 1,010,000 $475,000 120,000 (15,000) $580,000 $ 2,064,500 593,000 x (125,000) 5 OX 15,000 C $320,000 180,000 250,000 $ 970,000 708,000 1,088,000 0 4,000,000 32,000 tipayl 12,000 [cogs] 580,000 (E) 509,000AL 27,000 (D) 21,250[DI 18,750 (D) 420,000 [ADD [icogs) IA) TA) [A] [A] PPE, net Customer List Royalty Agreement Goodwill 64,500 14,500 189,000 106,250 93,750 120,000 4,582,000 85,000 75,000 120,000 $ 7,628,000 $7,070,000 $1,170,000 32,000 $ Liabilities and equity Accounts payable Other currentliabilities Long-term liabilities Common stock APIC Retained earnings $350,000 $100,000 payl 400,000 125,000 2,500,000 260,000 700,000 50,000 IE) 760,000 55,000 [E] 2.360,000 580,000 $7,070,000 $1,170,000 418,000 525,000 2,760,000 700,000 760,000 50,000 55,000 OX $ 1,338,000 $1,338,000 $ OX 2013 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP) through December 31, 2016 Year ended December 31, 100% AAP Amortization - Drin 2014 2015 2016 Property plant and equipment (PPB.net 27,000 $ 27.000 27.000 27,000 Customers 21.250 21250 21.250 21.250 Royalty Agreement 18.750 18.750 18,750 18.750 Goodwill ov O 0 0 Net amortization 67.000 $67.000 67.000 367,000 Jan 1 December 31, 100% Unamortired AAP. Dr(r) 2013 2013 2014 2015 2016 Property, plant and equipment (PPE.net $ 270,000 $243.000 216.000 189,000 $ 162,000 Customer 170,000 148,750 127.500 106,250 B5,000 Royalty freement 150.000 131.250 112.500 9.750 75.000 Goodwill 120.000 120.000 120.000 120,000 120,000 Net namortised 710.000 643.000 1 576,000 1 500,000 442,000 b. Compute the amount of the beginning of year [AD]] adjustment necessary for the consolidation of the financial statements for the year ended December 31, 2016, Do not use negative signs with your answers below. Change in Roth BOY 5 280.000 Cumulative AAP amorth BOY 201,000 14,500 BOYUpstream P Customs Prepare consolidation spreadsheet for continuous sale of inventory-Cost method A parent company acquired 100 percent of the stock of a subsidiary company on January 1, 2013, for $900,000. On this date, the balances of the subsidiary's stockholders equity accounts were Common Stock $50,000, Additional Paid in Capital $55,000, and Retained Earnings, $195,000. On the acquisition date, the excess was assigned to the following AP assets: Original Amount Ontral Untul Life Property, plante me 270.000 170,000 Royalty agreement 150.000 Goodwill 120,000 Indefinite The Goodwill asset has been tested annual for pairment and has not been found to be impaired Assume that the parent company sells inventory to its whally coined subsidiary. The subsidiary, ultimately. still the inventory to customers outside of the consolidated group. You have compiled the following data for the years ending 2015 and 2016 Inventory Gross Profit Remaining in Recente Sales Unseld Inventory 2016 $44.000 2015 $64.000 $14500 The inventory not remaining at the end of a given year is sold to unaffiliated entities outside of the consolidated group during the next year. The parent uses the cost method of pre-consolidation Equity Investment bookkeeping The inventory not remaining at the end of a given year is sold to unaffiliated enoties outside of the consolidated group during the next year. The parent uses the cost method of pre-consolidation Equity Investment bookkeeping The financial statements of the parent and its subsidiary for the year ended December 31, 2016, follow Parent Subsidiary Parent Subsidiary Income statement Balance sheet 34.000 100.000 Cost of gold 100.000 40.000 1650,000 $320,000 Grouprot 0.000 120.000 Acrescevabu 0.000 180,000 Incomenda 15.00 Ivory 50.000 Operating 1.000 200.000) Bly went 0.000 Netcon 345.000 $120.000 Properto 4.000.000 120.000 Statement of retained earnings 1220000059120,000 Dodanie 12.000.000 $478.000 abits and storey Metcon 45.000 120.000 Ale 550.000 $100,000 Die 12.000 15.000 other 400.000 125,000 12. LOL 2.000.000 200.000 Cum 0.000 50.000 APK 55.000 Head 2.000 500,000 52.000 5.170.000 N000 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (NAP through December 31, 2016 Year ended December 31 101 AA Amortization or 2014 2015 2016 Property puntament 27.000 3 37.000 27.000 27.000 Cantot 21250 21250 Bally Good 0 0 Net $2.000 57.000 52.000 57.000 21.250 21250 170 1 December 31 100% Usmond AAP.Dr. 200 2013 2016 2015 2016 Property and equipment (270,000 V 243.000 3 216.000 100.000 VS 162.000 Com 120.000 750 127500 106.250 85.000 Royalty 150,000 131.25 112.500 93.750 75.000 Godell 120,000 $20,000 120.000 120,000 120.000 Need 710 63.000 156.000 500.000.000 b. Compute the amount of the beginning of year son adjustment necessary for the comodation of the financial statements for the year ended December 31, 2016 Do not use negatives with your below. COY Cum er tvu BOY 201000 BOYIP 1450 ADA 500 0 0 0 0 0 0 0 0 0 C. Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet. Consolidation Journal Description Debit Credit [AD] Equity investment 64,500 BOY Retained earnings-Parent 64,500 IC) Income (loss) from subsidiary 15,000 0 Dividends 15,000 [E] BOY Common stock (Subsidiary) 50,000 BOY APIC (Subsidiary) 55,000 0 BOY Retained earnings-Subsidiary 475,000 Equity investment 580,000 (A) PPE, net 189,000 Customer list 106,250 Royalty Agreement 93,750 Goodwill 120,000 Equity investment 509,000 [D] Operating expenses 67,000 PPE, net 27,000 Customer List 21,250 Royalty Agreement 18,750 [icogs] Equity investment 14,500 Cost of goods sold 14,500 To recognize prior year profit on intercompany sales. [lsales] Sales 44,000 Cost of goods sold 44,000 [lcogs) Cost of goods sold 12,000 Inventory 12,000 To defer current period profit on intercompany sales. Dipayl Accounts payable 32,000 Accounts receivable 32,000 44) 0 0 > 0 0 0 0 (0) 0 4 0 0 0 0 0 0 Use negative signs with answers in the Consolidated column for Cost of goods sold, Operating expenses and Dividends. Consolidation Worksheet Income statement Parent Subsidiary Debit Credit Consolidated Sales $4,350,000 $800,000 (sales) 44,000 $ 5,106,000 Cost of goods sold (3,050,000) (480,000) icogs) 12,000 14,500 ficogs (3,483,500) 44,000 (sales) Gross profit 1,300,000 320,000 1.622.500 Equity income 15,000 [C] 15,000 0 Operating expenses (830,000) (200,000) ID 67,000 (1,097,000) Net income $485.000 $120,000 $ 525,500 Statement of retained earnings BOY retained earnings $2,000,000 $475,000 [E] 475,000 64,500 [ADD] $ 2,064,500 Net income 485.000 120,000 593,000 X Dividends (125,000) (15,000) 15,000 C (125,000) Ending retained earnings $2,360,000 $580,000 $ OX Balance sheet Assets Cash $650,000 $320,000 $ 970,000 Accounts receivable 560,000 180,000 32,000 payl 708,000 Inventory 850,000 250,000 12,000 icogs) 1,088,000 Equity investment 1,010,000 TAD] 64.500 580,000 LEI 0 [icogs! 14,500 509,000 A PPE.net 4,000,000 420,000 IA 189,000 27,000 (0) 4,582,000 Customer List IAI 106,250 21,250 ID 85,000 Royalty Agreement IA 93,750 18,750D 75,000 Goodwill IA 120,000 120,000 $7.070.000 $1.170.000 $ 7,628,000 Liabilities and equity Accounts payable $350.000 $100,000 payl 32,000 $ 418.000 Other currentliabilities 400,000 125,000 525.000 Long term liabilities 2.500,000 260,000 2.760,000 (C) [D) 15,000 67,000 (200,000) $120,000 (1,097,000) $ 525,500 [E] 475,000 64,500 [AD] Equity income 15,000 Operating expenses (830,000) Net income $485.000 Statement of retained earnings BOY retained earnings $2,000,000 Net income 485,000 Dividends (125,000) Ending retained earnings $2.360,000 Balance sheet Assets Cash $650,000 Accounts receivable 560,000 Inventory 850,000 Equity Investment 1,010,000 $475,000 120,000 (15,000) $580,000 $ 2,064,500 593,000 x (125,000) 5 OX 15,000 (0) $320,000 180,000 250,000 $ 970,000 708,000 1,088,000 0 4,000,000 32,000 tipay] 12,000 [cogs 580,000 (E) 509,000 Al 27,000 (D) 21,250[D] 18,750D 420,000 [AD] [icogs] (A) TA) [A] [A] PPE, net Customer List Royalty Agreement Goodwill 64,500 14,500 189,000 106,250 93,750 120,000 4,582,000 85,000 75,000 120,000 $ 7,628,000 $7,070,000 $1,170,000 32,000 $ Liabilities and equity Accounts payable Other currentliabilities Long-term liabilities Common stock APIC Retained earnings $350,000 $100,000 payl 400,000 125,000 2,500,000 260,000 700,000 50,000 IE) 760,000 55,000 [E] 2,360,000 580,000 $7,070,000 $1,170,000 418,000 525,000 2,760,000 700,000 760,000 50,000 55,000 0 X $ 1,338,000 $1,338,000 $ OX (C) [D) 15,000 67,000 (200,000) $120,000 (1,097,000) $ 525,500 [E] 475,000 64,500 CAD Equity income 15,000 Operating expenses (830,000) Net income $485,000 Statement of retained earnings BOY retained earnings $2,000,000 Net income 485,000 Dividends (125,000) Ending retained earnings $2,360,000 Balance sheet Assets Cash $650,000 Accounts receivable 560,000 Inventory 850,000 Equity Investment 1,010,000 $475,000 120,000 (15,000) $580,000 $ 2,064,500 593,000 x (125,000) 5 OX 15,000 C $320,000 180,000 250,000 $ 970,000 708,000 1,088,000 0 4,000,000 32,000 tipayl 12,000 [cogs] 580,000 (E) 509,000AL 27,000 (D) 21,250[DI 18,750 (D) 420,000 [ADD [icogs) IA) TA) [A] [A] PPE, net Customer List Royalty Agreement Goodwill 64,500 14,500 189,000 106,250 93,750 120,000 4,582,000 85,000 75,000 120,000 $ 7,628,000 $7,070,000 $1,170,000 32,000 $ Liabilities and equity Accounts payable Other currentliabilities Long-term liabilities Common stock APIC Retained earnings $350,000 $100,000 payl 400,000 125,000 2,500,000 260,000 700,000 50,000 IE) 760,000 55,000 [E] 2.360,000 580,000 $7,070,000 $1,170,000 418,000 525,000 2,760,000 700,000 760,000 50,000 55,000 OX $ 1,338,000 $1,338,000 $ OX 2013 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP) through December 31, 2016 Year ended December 31, 100% AAP Amortization - Drin 2014 2015 2016 Property plant and equipment (PPB.net 27,000 $ 27.000 27.000 27,000 Customers 21.250 21250 21.250 21.250 Royalty Agreement 18.750 18.750 18,750 18.750 Goodwill ov O 0 0 Net amortization 67.000 $67.000 67.000 367,000 Jan 1 December 31, 100% Unamortired AAP. Dr(r) 2013 2013 2014 2015 2016 Property, plant and equipment (PPE.net $ 270,000 $243.000 216.000 189,000 $ 162,000 Customer 170,000 148,750 127.500 106,250 B5,000 Royalty freement 150.000 131.250 112.500 9.750 75.000 Goodwill 120.000 120.000 120.000 120,000 120,000 Net namortised 710.000 643.000 1 576,000 1 500,000 442,000 b. Compute the amount of the beginning of year [AD]] adjustment necessary for the consolidation of the financial statements for the year ended December 31, 2016, Do not use negative signs with your answers below. Change in Roth BOY 5 280.000 Cumulative AAP amorth BOY 201,000 14,500 BOYUpstream P
