Question
Please fill in the blanks in the form I provided! This question looks similar to the other, but it's not the same question Padre, Inc.,
Please fill in the blanks in the form I provided!
This question looks similar to the other, but it's not the same question
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $765,440 cash. At the acquisition date, Sierras total fair value, including the noncontrolling interest, was assessed at $956,800 although Sierras book value was only $694,000. Also, several individual items on Sierras financial records had fair values that differed from their book values as follows:
| Book Value |
| Fair Value | ||||
Land | $ | 63,200 |
|
| $ | 241,200 |
|
Buildings and equipment (10-year remaining life) |
| 365,000 |
|
|
| 331,000 |
|
Copyright (20-year remaining life) |
| 159,000 |
|
|
| 261,000 |
|
|
For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies.
| Padre |
| Sierra | ||||
Revenues | $ | (1,498,640 | ) |
| $ | (686,150 | ) |
Cost of goods sold |
| 759,000 |
|
|
| 445,000 |
|
Depreciation expense |
| 339,000 |
|
|
| 12,400 |
|
Amortization expense |
| 0 |
|
|
| 7,950 |
|
Interest expense |
| 47,400 |
|
|
| 9,800 |
|
Equity in income of Sierra |
| (167,440 | ) |
|
| 0 |
|
Net income | $ | (520,680 | ) |
| $ | (211,000 | ) |
Retained earnings, 1/1/21 | $ | (1,332,500 | ) |
| $ | (534,000 | ) |
Net income |
| (520,680 | ) |
|
| (211,000 | ) |
Dividends declared |
| 260,000 |
|
|
| 65,000 |
|
Retained earnings, 12/31/21 | $ | (1,593,180 | ) |
| $ | (680,000 | ) |
Current assets | $ | 913,300 |
|
| $ | 630,150 |
|
Investment in Sierra |
| 880,880 |
|
|
| 0 |
|
Land |
| 365,000 |
|
|
| 63,200 |
|
Buildings and equipment (net) |
| 948,000 |
|
|
| 352,600 |
|
Copyright |
| 0 |
|
|
| 151,050 |
|
Total assets | $ | 3,107,180 |
|
| $ | 1,197,000 |
|
Accounts payable | $ | (270,000 | ) |
| $ | (149,000 | ) |
Notes payable |
| (494,000 | ) |
|
| (208,000 | ) |
Common stock |
| (300,000 | ) |
|
| (100,000 | ) |
Additional paid-in capital |
| (450,000 | ) |
|
| (60,000 | ) |
Retained earnings (above) |
| (1,593,180 | ) |
|
| (680,000 | ) |
Total liabilities and equities | $ | (3,107,180 | ) |
| $ | (1,197,000 | ) |
|
At year-end, there were no intra-entity receivables or payables.
1. Prepare a consolidation worksheet as of December 2021
2.Prepare consolidated financial statements using consolidated totals determined in requirement (1).
PADRE, INC. AND SIERRA CORPORATION Consolidated Financial Statements Income Statement Year Ended December 31, 2021 Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Consolidated net income To noncontrolling interest To Padre, Inc (controlling interest) Statement of Changes in Owners' Equity Year Ended December 31, 2021 Balance Sheet At December 31, 2021 Assets Current assets Land Buildings and equipment (net) Copyright Goodwill Total assets Liabilities Accounts payable Notes payable Owners' Equity Common stock Additional paid-in capital Retained earnings Non-controlling interest Total liabilities and owners' equity
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