QUESTION 3 Portsdown Company bought all of Speedwell Company's voting stock on January 1, 2020 for $125,000. Fair value information on Speedwell's assets and liabilities at the date of acquisition is as follows: Inventories are overvalued by $5,000. Speedwell uses FIFO to report its inventories, and acquisition date inventories were sold in 2020. Property and equipment is overvalued by $20,000. P&E has a 10-year remaining life, straight-line. Liabilities are understated by $500. Assume a 5-year remaining life, and straight-line amortization of any premium/discount. . Previously unreported identifiable intangibles are valued at $35.000. These intangibles have indefinite lives. but testing reveals impairment of $3,000 in 2020. Goodwill reported for this acquisition is not impaired in 2020. Portsdown uses the complete equity method to account for its investment in Speedwell on its own books. Trial balances for both companies at December 31, 2020 are in the consolidation working paper that follows. Portsdown Dr (Cr) $15,000 Speedwell Dr (Cr) $ 10.000 Consol Dr (Cr) Current assets Property and equipment, net Identifiable intangibles Investment in Speedwell 90,000 60,000 131,790 Goodwill Liabilities Capital stock Retained earnings, Jan. 1 Accumulated OCI, Jan. 1 Sales revenue 156.600) (40.000) 29,000) 1.000) 184.000) (28,635) (15,000) 1123 500) (175) (50.000) Portsdown uses the complete equity method to account for its investment in Speedwell on its own books. Trial balances for both companies at December 31, 2020 are in the consolidation working paper that follows. Portsdown Dr (Cr) $ 15,000 Speedwell Dr (Cr) $ 10,000 Consol Dr (Cr) Current assets Property and equipment, net Identifiable intangibles Investment in Speedwell 60,000 90,000 - 131,790 (28,635) 15,000) (23,500) (175) (50,000) - Goodwill Liabilities (156,600) Capital stock 40,000) Retained earnings, Jan. 1 (29,000 Accumulated OCI, Jan. 1 1.000) Sales revenue (84,000) Equity in NI of Speedwell (6,750) Equity in OCI of Speedwell (40) Cost of goods sold 55,000 Operating expenses 25,000 Interest expense 750 Other comprehensive income Total $ 0 35.000 12,000 50 3 (150) (40) 0 $ Required: Provide the consolidated income statement, statement of comprehensive income, and balance sheet for December 31, 2020 Attach File Browse My Computer Browse Content Collection QUESTION 3 Portsdown Company bought all of Speedwell Company's voting stock on January 1, 2020 for $125,000. Fair value information on Speedwell's assets and liabilities at the date of acquisition is as follows: Inventories are overvalued by $5,000. Speedwell uses FIFO to report its inventories, and acquisition date inventories were sold in 2020. Property and equipment is overvalued by $20,000. P&E has a 10-year remaining life, straight-line. Liabilities are understated by $500. Assume a 5-year remaining life, and straight-line amortization of any premium/discount. . Previously unreported identifiable intangibles are valued at $35.000. These intangibles have indefinite lives. but testing reveals impairment of $3,000 in 2020. Goodwill reported for this acquisition is not impaired in 2020. Portsdown uses the complete equity method to account for its investment in Speedwell on its own books. Trial balances for both companies at December 31, 2020 are in the consolidation working paper that follows. Portsdown Dr (Cr) $15,000 Speedwell Dr (Cr) $ 10.000 Consol Dr (Cr) Current assets Property and equipment, net Identifiable intangibles Investment in Speedwell 90,000 60,000 131,790 Goodwill Liabilities Capital stock Retained earnings, Jan. 1 Accumulated OCI, Jan. 1 Sales revenue 156.600) (40.000) 29,000) 1.000) 184.000) (28,635) (15,000) 1123 500) (175) (50.000) Portsdown uses the complete equity method to account for its investment in Speedwell on its own books. Trial balances for both companies at December 31, 2020 are in the consolidation working paper that follows. Portsdown Dr (Cr) $ 15,000 Speedwell Dr (Cr) $ 10,000 Consol Dr (Cr) Current assets Property and equipment, net Identifiable intangibles Investment in Speedwell 60,000 90,000 - 131,790 (28,635) 15,000) (23,500) (175) (50,000) - Goodwill Liabilities (156,600) Capital stock 40,000) Retained earnings, Jan. 1 (29,000 Accumulated OCI, Jan. 1 1.000) Sales revenue (84,000) Equity in NI of Speedwell (6,750) Equity in OCI of Speedwell (40) Cost of goods sold 55,000 Operating expenses 25,000 Interest expense 750 Other comprehensive income Total $ 0 35.000 12,000 50 3 (150) (40) 0 $ Required: Provide the consolidated income statement, statement of comprehensive income, and balance sheet for December 31, 2020 Attach File Browse My Computer Browse Content Collection