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Q 1. Presented below are selected amounts from the separate unconsolidated financial statements of Poe Corp. and its 90%-owned subsidiary, Shaw Co., at December 31,2002.

Additional information as follow:

Additional information:

On January 2, 20X2, Poe, Inc. purchased 90% of Shaw Co.s 100,000 outstanding common stock for cash of $155,000. On that date the fair value of the noncontrolling interest was $1.70 per share. On that date, Shaws stockholders equity equaled $150,000 and the fair values of Shaws identifiable assets and liabilities equalled their carrying amounts. Poe has accounted for the purchase as an acquisition.

Calculate the amounts that will appear on Poes consolidated financial statement on December 31,

20X2.

1. Cash (0.5 mark)

2. Goodwill (0.5 mark)

3. Equipment (0.5 mark)

4. Common stock (0.5 mark)

5. Investment in Shaw (0.5 mark)

6. Dividends (0.5 mark)

7. Bonds payable (0.5 mark)

8. Non-controlling interest (0.5 mark)

Q2: Differentiate between stock acquisition and assets acquisition? (1 mark)

Poe Shaw $710,000 490,000 21,000 $530,000 370,000 Selected income statement amounts Sales Cost of goods sold Gain on sale of equipment Earnings from investment in subsidiary Interest expense Depreciation 63,000 16,000 20,000 25,000 Selected balance sheet amounts Cash Inventories Equipment Accumulated depreciation Investment in Shaw Investment in Shaw bonds Discount on bonds Bonds payable Common stock Additional paid-in capital Retained earnings $ 50,000 229,000 440,000 (200,000) 191,000 100,000 (9,000) $ 15,000 150,000 360,000 (120,000) (100,000) (250,000) (404,000) (200,000) (10,000) (40,000) (140,000) Selected statement of retained earnings amounts Beginning balance, December 31, 20X1 Net income Dividends paid $272,000 212,000 80,000 $100,000 70,000 30,000