Patrick Corporation acquired 100 percent of O’Brien Company’s outstanding common stock on January 1 for $654,200 in cash
Posted: Sun Jul 03, 2022 3:58 pm
Patrick Corporation acquired 100 percent of O’Brien Company’soutstanding common stock on January 1 for $654,200 in cash. O’Brienreported net assets with a carrying amount of $418,000 at thattime. Some of O’Brien’s assets either were unrecorded (having beeninternally developed) or had fair values that differed from bookvalues as follows:
Any goodwill is considered to have an indefinite life with noimpairment charges during the year.
The following are financial statements at the end of the firstyear for these two companies prepared from their separatelymaintained accounting systems. O’Brien declared and paid dividendsin the same period. Credit balances are indicated byparentheses.
A. Which investment method did Patrick use to compute the$271,300 income from O'Brien?
B. Determine the totals to be reported for this businesscombination for the year ending December 31.
C. Verify the totals determined in part (b) by producing aconsolidation worksheet for Patrick and O’Brien for the year endingDecember 31.
For B
For C
Revenues Cost of goods sold Amortization expense Depreciation expense Income from O'Brien Net income Retained earnings, 1/1 Dividends declared Retained earnings, 12/31 Cash Receivables Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities Consolidated totals $ (2,060,500) $ 678,000 $ 36,370
Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien Net income Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 Cash Receivables Inventory Investment in O'Brien PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equity $ (271,300) $ (1,148,500) $ $ Patrick (1,372,500) $ 366,000 94,500 34,800 $ (844,000) (1,148,500) 165,000 (1,827,500) $ 249,000 $ 414,000 258,000 822,500 514,000 0 958,000 0 $ 3,215,500 $ (988,000) (400,000) (1,827,500) $ (3,215,500) $ O'Brien (688,000) 312,000 93,600 0 0 (282,400) (318,000) (282,400) 103,000 (497,400) 122,000 85,200 146,000 65,700 0 328,000 0 746,900 (149,500) (100,000) (497,400) (746,900) $ Consolidation Entries Debit Credit 0 69 $ Consolidated Totals
Any goodwill is considered to have an indefinite life with noimpairment charges during the year.
The following are financial statements at the end of the firstyear for these two companies prepared from their separatelymaintained accounting systems. O’Brien declared and paid dividendsin the same period. Credit balances are indicated byparentheses.
A. Which investment method did Patrick use to compute the$271,300 income from O'Brien?
B. Determine the totals to be reported for this businesscombination for the year ending December 31.
C. Verify the totals determined in part (b) by producing aconsolidation worksheet for Patrick and O’Brien for the year endingDecember 31.
For B
- Patrick Corporation Acquired 100 Percent Of O Brien Company S Outstanding Common Stock On January 1 For 654 200 In Cash 1 (15.53 KiB) Viewed 17 times
- Patrick Corporation Acquired 100 Percent Of O Brien Company S Outstanding Common Stock On January 1 For 654 200 In Cash 2 (43.32 KiB) Viewed 17 times
Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien Net income Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 Cash Receivables Inventory Investment in O'Brien PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equity $ (271,300) $ (1,148,500) $ $ Patrick (1,372,500) $ 366,000 94,500 34,800 $ (844,000) (1,148,500) 165,000 (1,827,500) $ 249,000 $ 414,000 258,000 822,500 514,000 0 958,000 0 $ 3,215,500 $ (988,000) (400,000) (1,827,500) $ (3,215,500) $ O'Brien (688,000) 312,000 93,600 0 0 (282,400) (318,000) (282,400) 103,000 (497,400) 122,000 85,200 146,000 65,700 0 328,000 0 746,900 (149,500) (100,000) (497,400) (746,900) $ Consolidation Entries Debit Credit 0 69 $ Consolidated Totals