Show the impact on Company A's balance sheet for a purchase of 35% of company B.

Company A paid $400,000 for the investment

You determine how Company A paid for the investment.

Any excess is allocated to undervalued fixed assets with a seven year life

Show the impact on Company A's Income Statement and Balance sheet for the Company B Dividend

Total Dividend paid was $1,000,000

Show the impact on Company B's Income Statement for Company A's share of Company B's Income.

Company B's income is reflected on the Company B Income statement.'

Show the impact of any other equity method transactions that need to be recorded.

Project 2

Balance Sheet

Company A Buys 35% of Company B

Company A

Company B

Assets

Current Assets

$ 2,696,190

$ 1,915,316

Investment in Company B

Investments

992,500

Other Intangible Assets

80,765

Equipment

856,341

352,226

Other Assets

360,515

266,181

Deferred Tax Assets

33,421

177,327

Goodwill

64,312

Total Assets

$ 4,010,779

$ 3,784,315

Liabilities

Current Liabilities

$ 2,045,968

$ 1,056,641

Long Term Liabilities

916,862

1,648,684

Total Liabilities

$ 2,962,830

$ 2,705,325

Stockholder's Equity

Non-Controlling Interest

$ 107

$ 44,617

Common Stock

2,917

217,209

Preferred Stock

386,401

27,391

Additional Paid In Capital

1,119,775

1,018,667

Treasury Stock

(57,733)

Retained Earnings

(403,518)

(228,894)

Total Stockholer's Equity

$ 1,047,949

$ 1,078,990

Total Labilities and Stockholder's Equity

$ 4,010,779

$ 3,784,315

Project 2
Income Statement
Company B Declares a $1,000,000 Dividend
		Company A		Company B
Revenues		$ 10,695,652		$ 6,920,384
Cost of Goods Sold		7,448,067		5,135,927
Gross Profit		$ 3,247,585		$ 1,784,457
Operating and Selling Expenses		2,535,373		103,558
Asset Impairment		70,226		11,376
General and Administrative Expenses		672,827		1,645,245
Net Income from Operations		$ (30,841)		$ 24,278
Non-Controlling Interest In Income		107		(12,694)
Other Income/(Loss)		(26,485)		698,748
Income Tax (Expense) Benefit		(1,697)		(248,722)
Net Income		$ (58,916)		$ 461,610