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POINTS) Hullett Enterprises acquired Owens, Inc. on January 1, 2021. The $450,000.excess of cost over book value of Owens' net assets was partly attributable
POINTS) Hullett Enterprises acquired Owens, Inc. on January 1, 2021. The $450,000.excess of cost over book value of Owens' net assets was partly attributable to a patent undervalued by $200,000. The patent has a 10-year life. The remaining excess is considered goodwill. The separate financial statements of the two companies for 2025 are presented below. a. Prepare all necessary consolidation entries for 2025 consolidated financial statements. b. Now assume that at year-end a goodwill impairment test is conducted before the consolidated statements are issued. The estimated fair value of the subsidiary is $1,500,000. The fair value of the identifiable net assets is $1,300,000. Prepare any journal entries resulting from the test. Hullett Owens Sales revenue Cost of goods sold Gross profit Operating expenses Equity income Net Income $3,307,500 (2,381,400) $1,533,750 (920,250) Retained Earnings, 1/1/25 $ 3,731,900 Net income Dividends 624,700 (124,940) Retained Earnings, 12/31/25 $ 4.231.660 926,100 (496,125) 194,725 $ 624.700 613,500 (398,775) $214.725 $ 792,437 214,725 (32.209) $ 974.953 Cash and receivables $ 1,421,264 $ 751,026 Inventory Common stock Additional paid-in capital Retained Earnings, 12/31/25 Total Liabilities and Equities Equity investment Property, plant & equipment (Net) Total Assets Accounts payable Accrued liabilities Notes payable 6,834,618 $11,094.209 $ 484,218 575,506 1,283,310 1,555,017 457,058 845,608 $2,053,692 $ 146,218 191,207 1,500,000 511,250 515,225 102,252 3,787,600 127,812 4,231,660 $11.094.209 974,953 $2.053.692
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