- On January 2 2018 Company Pacquired All Of The Outstanding Voting Stock Of Company S In Exchange For 6 000 In Stock 1 (87.1 KiB) Viewed 45 times
- On January 2 2018 Company Pacquired All Of The Outstanding Voting Stock Of Company S In Exchange For 6 000 In Stock 2 (88.86 KiB) Viewed 45 times
On January 2, 2018,
Company Pacquired all of the outstanding voting stock of
Company S in exchange for $6,000 in stock.
Company P elected to exercise control over
Company S as a wholly owned subsidiary with an independent accounting system. Both companies have December 31 year ends. At the acquisition date,
Company S has a stockholder's equity of $2,500, which includes Retained Earnings of $1,700,
Company P pursued the acquisition, in part, to utilize
Company S technology and computer software. These items had fair values that differed from their values on
Company S books as follows: Remaining Asset Book Value Fair Value Life Patented technology $ 140 $ 2,240 7 years Computer software $ 60 $ 1,260 12 years At December 31 2020,
Company Sowes
Company P $20.
Company s remaining identifiable assets and liabilities had acquisiiton-date book values that closely approximated fair values. Since acquisition, no assets have been impaired. During the next three years,
Company S reported the following income and dividends: Net Income Dividends 2018 $ 900 $ 150 2019 $ 940 $ 150 2020 $ 975 $ 150 REQUIRED: LABEL EACH STEP Points 1. Prepare the analysis as of acquisition date including unamortized 15 2. Calculate the balance in the account Investment in Sub as of 12/3 10 3. Prepare the journal entries
Company P recorded with respect to its 15 4. Separately calculate consolidated net income for 2020 20 5 Prepare all necessary elimination entries for the year ended 2020. 20 6. Complete the consolidated workpapers for the year ended 12/31/2 20 Use appropriate formulas throughout your work. 100 YOU MUST WORK INDEPENDENTLY Do all work on the spreadsheet tab.
Template CONS.TOT. INCOME
STATEMENT FYE 12/31/20 (000's) Sales Equity in sub earnings P
Company S
Company ELIMINATIONS DR. CR. 2,720 2,250 575 Total revenues Cost of goods sold Depreciation expense Amortization expense 3,295 1,350 275 370 2,250 870 380 25 4,970 575 0 5,545 2,220 655 395 0 3,270 2,275 1,995 1,300 1,275 975 Total expenses Net Income RETAINED EARNINGS
STATEMENT Retained Earnings 1/1 Net income Dividends declared Retained Earnings 12/31 BALANCE SHEET Current assets Computer software Patented technology Goodwill 7,470 1,300 600 8,170 3,240 975 150 4,066 10,710 2,275 750 12,235 490 300 800 100 375 45 80 Equipment Investment in sub 1,835 7165 4,500 865 345 880 100 0 6,335 7,165 0 0 15,690 655 0 2,800 0 12,235 0 15,690 Total assets Liabilities 10,690 520 5,000 135 Common stock 2,000 800 Retained earnings 8,170 4,065 Total liabilities and equity 10,690 5,000 0 0