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Please help! I'm completely stuck Consolidation subsequent to date of acquisition-Equity method with noncontrolling interest and AAP Assume, on January 1, 2015, a parent company
Please help! I'm completely stuck
Consolidation subsequent to date of acquisition-Equity method with noncontrolling interest and AAP Assume, on January 1, 2015, a parent company acquired a 90% interest in its subsidiary. The total fair value of the controlling and noncontrolling interest was $445,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: Original Original [Al Asset Amount Useful Life Property, plant, and equipment $ 140,000 10 years Customer list 95,000 5 years Goodwill 210,000 Indefinite $ 445,000 90% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre-consolidation financial statements at December 31, 2019: Parent Subsidiary Parent Subsidiary Income statement: Balance sheet: Sales $5,760,000 1,500,000 Assets Cost of goods sold (4,000,000) (960,000) Cash $ 400,000 $ 60,000 Gross profit 1,760,000 540,000 Accounts receivable 752,000 200,000 Equity income 96,300 Inventory 960,000 440,000 Operating expenses (1,120,000) (400,000) Equity investment 882,000 Net income 736,300 140,000 Property, plant and equipment, net 2,240,000 720.000 Statement of retained earnings: $5,234,000 $1,420,000 Beginning retained eamings: 1,377,700 400,000 Liabilities and stockholders' equity Net income 736,300 140,000 Accrued liabilities 800,000 320,000 Dividends (160,000) (40,000) Long-term liabilities 1,600,000 400,000 Ending retained earnings $1,954,000 $500,000 Common stock 160,000 80,000 APIC 720,000 120,000 Retained earnings 1,954.000 500.000 $5,234,000 $1,420,000 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP. Unamort Unamort Unamort Unamort Unamort Unamort AAP 2015 AAP 2016 AAP 2017 AAP 2018 AAP 2019 100% AAP 01/15/15 Amort 12/31/15 Amort 12/31/16 Amort 12/31/17 Amort 12/31/18 Amort 12/31/19 PPE, net $ 140,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ O S 0 $ Customer list 95,000 Goodwill 210,000 0 0 0 0 0 0 0 0 0 $445,000 S 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0$ 0S 0 $ 0 Parent iphol: PPE, net $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0S 0 0 Customer list 0 0 0 0 0 0 0 0 0 0 0 Goodwill 0 0 0 0 0 0 0 0 0 0 0 $ 0S0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 050$ 0 Subsidiary inci%) PPE, net $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0S 0 $ 0 Customer list Goodwill 0 OS O $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0S 0 $ 0 b. Calculate and organize the profits and losses on intercompany transactions and balances. (No intercompany transactions) c. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. Equity investment account at 1/1/19 p book value of subsidiary's net assets $ Unamortized p% AAP p Equity investment account at 12/31/19 hook value of subsidiary's net assets $ Unamortized p%AAP Consolidation subsequent to date of acquisition-Equity method with noncontrolling interest and AAP Assume, on January 1, 2015, a parent company acquired a 90% interest in its subsidiary. The total fair value of the controlling and noncontrolling interest was $445,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: Original Original [Al Asset Amount Useful Life Property, plant, and equipment $ 140,000 10 years Customer list 95,000 5 years Goodwill 210,000 Indefinite $ 445,000 90% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre-consolidation financial statements at December 31, 2019: Parent Subsidiary Parent Subsidiary Income statement: Balance sheet: Sales $5,760,000 1,500,000 Assets Cost of goods sold (4,000,000) (960,000) Cash $ 400,000 $ 60,000 Gross profit 1,760,000 540,000 Accounts receivable 752,000 200,000 Equity income 96,300 Inventory 960,000 440,000 Operating expenses (1,120,000) (400,000) Equity investment 882,000 Net income 736,300 140,000 Property, plant and equipment, net 2,240,000 720.000 Statement of retained earnings: $5,234,000 $1,420,000 Beginning retained eamings: 1,377,700 400,000 Liabilities and stockholders' equity Net income 736,300 140,000 Accrued liabilities 800,000 320,000 Dividends (160,000) (40,000) Long-term liabilities 1,600,000 400,000 Ending retained earnings $1,954,000 $500,000 Common stock 160,000 80,000 APIC 720,000 120,000 Retained earnings 1,954.000 500.000 $5,234,000 $1,420,000 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP. Unamort Unamort Unamort Unamort Unamort Unamort AAP 2015 AAP 2016 AAP 2017 AAP 2018 AAP 2019 100% AAP 01/15/15 Amort 12/31/15 Amort 12/31/16 Amort 12/31/17 Amort 12/31/18 Amort 12/31/19 PPE, net $ 140,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ O S 0 $ Customer list 95,000 Goodwill 210,000 0 0 0 0 0 0 0 0 0 $445,000 S 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0$ 0S 0 $ 0 Parent iphol: PPE, net $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0S 0 0 Customer list 0 0 0 0 0 0 0 0 0 0 0 Goodwill 0 0 0 0 0 0 0 0 0 0 0 $ 0S0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 050$ 0 Subsidiary inci%) PPE, net $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0S 0 $ 0 Customer list Goodwill 0 OS O $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0S 0 $ 0 b. Calculate and organize the profits and losses on intercompany transactions and balances. (No intercompany transactions) c. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. Equity investment account at 1/1/19 p book value of subsidiary's net assets $ Unamortized p% AAP p Equity investment account at 12/31/19 hook value of subsidiary's net assets $ Unamortized p%AAPStep by Step Solution
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