Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

2.Prepare consolidated financial statements using consolidated totals determined in requirement (1).

image text in transcribedimage text in transcribed

image text in transcribed

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting And Auditing Research Tools And Strategies

Authors: Thomas Weirich, Thomas C. Pearson, Alan Reinstein

6th Edition

032430224X, 9780324302240

More Books

Students also viewed these Accounting questions

Question

What has been the evolution of HRM?

Answered: 1 week ago

Question

What would you do?

Answered: 1 week ago