Question

On January 1, 2016 Lonestar Company spent $240,000 to acquire all Bob Corporation's outstanding shares by paying $100,000 in cash and issuing 10,000 of ts $1 par value common stock that was trading on the NYSE at $14 per share on that same date. The financial statements of the two companies were as follows on December 31, 2018| Lonestar Bob Co Co Income Statement Service Revenue Less: Cost of Services Less: Depreciation Expense Less: Other Expenses Income from Bob Cor Net Income Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance Balance Sheet Cash Accounts Receivable Land Buildings & Equipment Investmentin Bob Corp 610,000 (470,000) (35,000) (57,000) 240,000 (130,000) (18,000) (60,000) 76,000 32,000 292,000 76,000 0,000 338,000 120,000 32,000 (12,000) 140,000 74,000 130,000 60,000 235,000 268,000 42,000 53,000 50,000 257,000 Total Assets Accounts Payable Taxes Payable Notes Payable Common Stock Retained Earnings Total Liabilities & Equity 767,000 71,000 58,000 100,000 200,000 338,000 767,000 402,000 17,000 60,000 85,000 100,000 140,000 402,000 Bob Corporation reported common stock and retained earnings totaled $200,000 at the date of acquisition. The difference between the acquisition price and underlying book value was assigned to buildings and equipment with a remaining economic life of 10 years from the date of acquisition. Bob owed Lonstar $10,000 as of December 31, 2018. Lonestar uses the equity method to account for its investment in Bob Required. 1. 2. Provide the journal entry recorded by Lonestar Corporation for its investment in Bob for 2016 Provide the equity method journal entries recorded by Lonestar Corporation for its investment in Bob for 2018 Prepare the consolidation entries for 2018 Prepare a consolidation worksheet for December 31, 2018 3. 4.

Answer 1

insues Please hi4 OKE buton the hees os aay Pusthes eRlaao Please but the Puyous suesy s Com.meat ge the bock to you e8 sue 0 ess:ocok val vesssais value AIleCaHo -900,000 $4O,000 Ame u,000 barlance sheet $ 130.000 Cash 00,000

eveat accoant ncome fsom atamco 32.000 2Cas 3 32000 312.000 come oon eom u,000 $u,000 900,00o S 38.C0o $ 38/000 onon stock Retaiblce abmine N:9on8 asam $ 12.000 $Su0.000 01 амо) ,0c0 6 Bulcine ans equit Phe -$ 12,000 0.000

a) Account ftob s (o,o0o ectoust Reseivoble 10.000 BioBution | consak income stattme sewire Revenue ess cogt Revenue 610000 ssu. $1 50,000 iess. perbacia oo $35.000 -18.000 uooo-57,000 2,000 s u00o Ner tocom eginig galc Net income 891,000 596.coo $32.000 д 3G.co o suce6 120.000 10 000 21.00 S 16.000 8 -30000 -12000 д 1100 s-засо Oeclase eneing Balance 4338,000 1uo.000, s ist.oco9l16,000 9 3 3800 S 116000 aalance sheet accounHS peceivable 30,000 560 000 193.000 lan8 12,000 2u0,000 S 1161 000 4 uo. 0oo 520000 2<.000 Total Asste

Totes Payable $ 5.00o$ 60.00 loke (a ya ole 100.cco $SS.00 connon stoc к 与20o.coo goo elata 3 9,00O 1l8 000 ダ18s.coo 9 200,00o 000 s (00,000 100.000 snings 300140.00 $156.000 $16000 9338.00 Total tiob:1汁les 376 ,000 午 4o1.cco $266,000 $ 16-600 日919000 4 equit 3