Question

CLICK HERE TO REVIEW LEARNING OBJECTMES QUESTION 5 Not complete Marked out of 9.00 Flag question Determining ending consolidated balances in the second year following the acquisitio Assume a parent company acquired a subsidiary on January 1, 2015. The purchase price wa $745,000 in excess of the subsidiary's book value of Stockholders Equity on the acquisition date, and that excess was assigned to the following [A] assets: Original Original Useful Life Amount (years) [AJ Asset Property, plent and equipment (PPE), net 5350,000 15 Goodwill 385,000 Indefinite $745,000 The AAP asset relating to undervalued PPE with a 15-year useful life has been depreclated as part of the parent's equity method accounting. The financial statements of the parent and it:s subsldlary for the year ended December 31, 2016, are as follows: Parent Subsidiary Parent Subsidia Income statement: Sales Cost of goods sold Gross proft Equity income Balance sheet: $6,075,000 $1,500,000 Assets (4,950,000 900,000 Cash 51,295,313 386,5 25,000 600,000 Accunts receivable ,760,000 348,0 2,667,500 447,0 1,875,500 186,000 (1,031,250) (390,000) Equity investment 1,079,750 S210,000 Property, plant end equipmet 1460827. Net income PPE), net $21,804,813 $2,009,5 Statement of retained DOY retained earnings $4,639,750 775,000 Net income Dividends Ending retained earnings ,079,750 210,000 Accounts paysble $1,006,500 S143,0 196,250 17,0 ,750,000 500,D (217,000) 31,500 Accrued labilities 953,500 Long term liabiliies Common stock APIC Retained earnings 640,563 100,0 4,709,000 125,D 5,502,500 953,5 521,804,813 52,008,5 At what amount will the following accoun ts appear on the consolidated financial statements a. Sales b. Equity Income c Operating expenses e. Equity Investment f. Praperty plant and equipment (PPE) net . Gaodwl h Common stack i. Retained earnings Check

Answer 1

Ans: Amount to be Appeared in consolidated Balance sheet as on 31.12.2016

		Parent	Subsidiary	Combine	Eliminate	Total
Sales		$6,875,000	$1,500,000	$8,375,000		$8,375,000
Equity Income		$186,000		$186,000	$186,000	$0
Operating Expenses		$1,081,250	$390,000	$1,471,250		$1,471,250
Account Receivable		$1,760,000	$348,000	$2,108,000		$2,108,000
Equity Investment		$1,875,500		$1,875,500	$1,875,500	$0
Property , Plant and Equipment net		$14,206,500	$827,000	$15,033,500	-$312000	$15,345,500
Goodwill					-385000	385000
Common Stock		$640,563	$100,000	$740,563	$100,000	$640,563
Retained Earnings		$5,502,500	$953,500	$6,456,000	24000	$6,432,000

Computation of Net value of Property, Plant and Equipment in excess of Book value in books of Subsidiary

Excess Value of Property, Plant and Equipment in excess of Book value in books of Subsidiary	Life -15 years		$360,000
less
Depreciation	for
	2015		$24,000
	2016		$24,000
Net value of Property, Plant and Equipment in excess of Book value in books of Subsidiary			$312,000

Computation of Share of Minority Interest in Income of 2016   
Profit during the year    $210,000
Equity income of Parent            $186,000
Share of Minority Interest            $24,000