QUESTION 6 On Jan. 1 Year 1, P spent 250 million to buy 100% of S. At that date, some key numbers (in millions) are: S common stock 15 Spaid-in capital 20 S retained earnings 80 Total book equity = 115 All of the assets and liabilities of Shad book values = fair values, exc&pt: Intangible assets of S (book value = zero, but fair value = 30. Life = 5 years). Building had book value 120 but fair value = 130. Life - 10 years. At the end of year 1, the books of the two companies reflect the following: S Book value 63 Book value 300 105 15 12 13 35 10 300 100 0 269 26 0 0 1050 0 198 26 38 10 29 340 Cash Receivables (30 receivable by P from S) Inventory Land Buildings (net of deprec.) Investment in s Intangible assets Goodwill total assets Accounts payable (30 payable by S to P) Accrued liabilities long-term bonds total liabilities Common stock of P, at par Common stock of S, at par Additional paid-in capital retained earnings (ending) total equity Total liabilities + equity Revenues Expenses Income from subsidiary Dividends (S paid 10 to P) Beginning Retained earnings Ending retained earnings 9 57 395 25 15 85 545 20 106 141 655 1050 198 294 136 100 203 29 30 10 80 455 545 106 6. What is the correct consolidated balance for land? (1/2 point) 7. What is the correct consolidated balance for Receivables? (1/2 point) 8. What is the correct consolidated balance for Buildings, net of depreciation? (1/2 point) 9. What is the correct consolidated balance for additional paid-in capital? (1/2 point) 10. What is the correct consolidated balance for investment in S? (1/2 point) 11. What is the correct consolidated balance for goodwill? (1/2 point) 12. What is the correct consolidated balance for net income? (1/2 point) 13. What is the appropriate amortization and/or deprecation, if any, to be recorded this year in consolidation entries with regard to the acquisition of S? (1/2 point) 14. What is the correct consolidated balance for revenues? (1/2 point) 15. Give the consolidation entry, if any, that would be needed with regard to the dividends paid by 5 to P (1 point) 16. Give the consolidation entry, if any, that would be needed with regard to the equity in earnings of subsidiary recorded by the parent company. (1 point) QUESTION 6 On Jan. 1 Year 1, P spent 250 million to buy 100% of S. At that date, some key numbers (in millions) are: S common stock 15 Spaid-in capital 20 S retained earnings 80 Total book equity = 115 All of the assets and liabilities of Shad book values = fair values, exc&pt: Intangible assets of S (book value = zero, but fair value = 30. Life = 5 years). Building had book value 120 but fair value = 130. Life - 10 years. At the end of year 1, the books of the two companies reflect the following: S Book value 63 Book value 300 105 15 12 13 35 10 300 100 0 269 26 0 0 1050 0 198 26 38 10 29 340 Cash Receivables (30 receivable by P from S) Inventory Land Buildings (net of deprec.) Investment in s Intangible assets Goodwill total assets Accounts payable (30 payable by S to P) Accrued liabilities long-term bonds total liabilities Common stock of P, at par Common stock of S, at par Additional paid-in capital retained earnings (ending) total equity Total liabilities + equity Revenues Expenses Income from subsidiary Dividends (S paid 10 to P) Beginning Retained earnings Ending retained earnings 9 57 395 25 15 85 545 20 106 141 655 1050 198 294 136 100 203 29 30 10 80 455 545 106 6. What is the correct consolidated balance for land? (1/2 point) 7. What is the correct consolidated balance for Receivables? (1/2 point) 8. What is the correct consolidated balance for Buildings, net of depreciation? (1/2 point) 9. What is the correct consolidated balance for additional paid-in capital? (1/2 point) 10. What is the correct consolidated balance for investment in S? (1/2 point) 11. What is the correct consolidated balance for goodwill? (1/2 point) 12. What is the correct consolidated balance for net income? (1/2 point) 13. What is the appropriate amortization and/or deprecation, if any, to be recorded this year in consolidation entries with regard to the acquisition of S? (1/2 point) 14. What is the correct consolidated balance for revenues? (1/2 point) 15. Give the consolidation entry, if any, that would be needed with regard to the dividends paid by 5 to P (1 point) 16. Give the consolidation entry, if any, that would be needed with regard to the equity in earnings of subsidiary recorded by the parent company. (1 point)
