The following is selected financial statements for Company P and Company Sat 31 December 2018. Account Company P Companys Revenues 894,600 652,400 Cost of Goods Sold 483,000 277,200 Expenses (including interest expense of 187,600 225,400 convertible bonds) Interest Expense - Bonds 33,600 NA Interest Income -Bond Investment NA 15,400 Equity in Company S Income ?? NA Net Income ?? ?? R/E @ 1 January 2018 307,200 505,400 Net Income ?? ?? Dividends Paid 217.000 85,400 RE @ 31 December 2018 ?? ?? Cash & Receivables 186,200 109,200 Inventory 239,400 121,800 Investment in Company S 625,840 NA Investment in Company P Bonds NA ?? Land, Buildings, & Equipment(net) 348,600 757,400 Total Assets ?? ?? Accounts Payable 115,000 132,400 Bands Payable (Convertible) 200,000 100,000 Bonds Payable 280,000 140,000 Discount on Bonds Payable NA Common Stock 420,000 168,000 R/E @ 31 December 2018 ?? Total Liabilities & Stockholders' Equity ?? ?? 22 Required: 1. Using a worksheet format, prepare the Consolidated Financial Statements for year 2018, [Show all your calculations) Assignment Part B (14 Marks) Company Pacquired 70% of the 100,000 outstanding common stock of Company S on 1 January 2015. The acquisition price included a $30,000 control premium. On the date of acquisition, an equipment was undervalued by $42,000 in the books of Company S. The equipment has a remaining useful life of 10 years. The remaining excess fair value was attributed to Goodwill. Company Paccounted for the investment using the partial equity method. Between 1 January 2015 and 1 January 2018, the Investment in Company S account has increased by $89,180. Company S did not issue any new common stock during the period 2015-2018. On 1 January 2018, Company Preported $280,000 in bonds outstanding with a book value of $263,200. These bonds carry a coupon rate of 10%. Company Spurchased half of these bonds on the open market for $135,800 During 2018, Company P sold to Company Smerchandise inventory costing $112,000 at a price of $140,000. All but $14,000 of these goods were resold to outside parties by the end of 2018. Companys still owed $50,400 for inventory shipped from Company P during December. Company P has convertible bonds that were issued at face value in 2016. These are 6% bonds that can be converted into 15,000 common stock(shares) Company S has convertible bonds that were issued at face value in 2017. These are 7% bonds that can be converted into 14,000 common stock(shares) Company P has 500,000 common stock(shares) outstanding by the end of 2018 Ignore tax rate The following is selected financial statements for Company P and Company Sat 31 December 2018. Account Company P Companys Revenues 894,600 652,400 Cost of Goods Sold 483,000 277,200 Expenses (including interest expense of 187,600 225,400 convertible bonds) Interest Expense - Bonds 33,600 NA Interest Income -Bond Investment NA 15,400 Equity in Company S Income ?? NA Net Income ?? ?? R/E @ 1 January 2018 307,200 505,400 Net Income ?? ?? Dividends Paid 217.000 85,400 RE @ 31 December 2018 ?? ?? Cash & Receivables 186,200 109,200 Inventory 239,400 121,800 Investment in Company S 625,840 NA Investment in Company P Bonds NA ?? Land, Buildings, & Equipment(net) 348,600 757,400 Total Assets ?? ?? Accounts Payable 115,000 132,400 Bands Payable (Convertible) 200,000 100,000 Bonds Payable 280,000 140,000 Discount on Bonds Payable NA Common Stock 420,000 168,000 R/E @ 31 December 2018 ?? Total Liabilities & Stockholders' Equity ?? ?? 22 Required: 1. Using a worksheet format, prepare the Consolidated Financial Statements for year 2018, [Show all your calculations) Assignment Part B (14 Marks) Company Pacquired 70% of the 100,000 outstanding common stock of Company S on 1 January 2015. The acquisition price included a $30,000 control premium. On the date of acquisition, an equipment was undervalued by $42,000 in the books of Company S. The equipment has a remaining useful life of 10 years. The remaining excess fair value was attributed to Goodwill. Company Paccounted for the investment using the partial equity method. Between 1 January 2015 and 1 January 2018, the Investment in Company S account has increased by $89,180. Company S did not issue any new common stock during the period 2015-2018. On 1 January 2018, Company Preported $280,000 in bonds outstanding with a book value of $263,200. These bonds carry a coupon rate of 10%. Company Spurchased half of these bonds on the open market for $135,800 During 2018, Company P sold to Company Smerchandise inventory costing $112,000 at a price of $140,000. All but $14,000 of these goods were resold to outside parties by the end of 2018. Companys still owed $50,400 for inventory shipped from Company P during December. Company P has convertible bonds that were issued at face value in 2016. These are 6% bonds that can be converted into 15,000 common stock(shares) Company S has convertible bonds that were issued at face value in 2017. These are 7% bonds that can be converted into 14,000 common stock(shares) Company P has 500,000 common stock(shares) outstanding by the end of 2018 Ignore tax rate
