Question
Tyler Company acquired all of Jasmine Companys outstanding stock on January 1, 2016, for $244,700 in cash. Jasmine had a book value of only $169,500
Tyler Company acquired all of Jasmine Companys outstanding stock on January 1, 2016, for $244,700 in cash. Jasmine had a book value of only $169,500 on that date. However, equipment (having an eight-year remaining life) was undervalued by $61,600 on Jasmines financial records. A building with a 20-year remaining life was overvalued by $12,000. Subsequent to the acquisition, Jasmine reported the following:
Net Income | Dividends Declared | |||||
2016 | $ | 54,600 | $ | 10,000 | ||
2017 | 88,800 | 40,000 | ||||
2018 | 38,000 | 20,000 | ||||
In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow:
Tyler Company | Jasmine Company | ||||||
Revenuesoperating | $ | (480,000 | ) | $ | (189,000 | ) | |
Expenses | 275,000 | 151,000 | |||||
Equipment (net) | 336,000 | 61,500 | |||||
Buildings (net) | 302,000 | 70,200 | |||||
Common stock | (290,000 | ) | (78,300 | ) | |||
Retained earnings, 12/31/18 | (510,000 | ) | (169,000 | ) | |||
Determine the following account balances as of December 31, 2018:
Investment in Jasmine Company
Equity in Subsidiary Earnings
Consolidated Net Income
Consolidated Equipment (net)
Consolidated Building (net)
Consolidated Goodwill (net)
Consolidated Common Stock
Consolidated Retained Earnings, 12/3118
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