Question #4 please! **Net Income and Dividends Analysis**This data table provides the net income and dividend figures for the years 2018, 2019, and 2020. Each year includes corresponding figures for net income and dividends:- **2018:** - Net Income: $900 - Dividends: $150- **2019:** - Net Income: $940 - Dividends: $150- **2020:** - Net Income: $975 - Dividends: $150**Required Steps for Financial Analysis:**1. **Prepare the Analysis:** - Analyze the acquisition date, including the unamortized differential from January 1, 2018, through 2020.2. **Calculate Investment Balance:** - Determine the balance in the Investment in Sub account as of December 31, 2020. Ensure all calculations are shown.3. **Journal Entries for Company P:** - Record the appropriate journal entries that Company P made concerning its investment in Company S for the year ending December 31, 2020.4. **Consolidated Net Income Calculation:** - Separately calculate the consolidated net income for the year 2020.5. **Prepare Elimination Entries:** - Prepare all necessary elimination entries for the year ending 2020.6. **Complete Consolidated Workpapers:** - Finalize the consolidated workpapers for the year ending December 31, 2020.These tasks are essential for accurate financial reporting and consolidation of financial statements. On January 2, 2018, Company P acquired 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 as of the acquisition date:| Asset | Book Value | Fair Value | Remaining Life ||----------------------|------------|------------|----------------|| Patented technology | $140 | $2,240 | 7 years || Computer software | $60 | $1,260 | 12 years |As of December 31, 2020, Company S owes Company P $20.Company S's remaining identifiable assets and liabilities had acquisition-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:

SOLUTION:- a.) Acquisition Analysis: Amt (in $) Book Value 2500 Purchase price…

Answered: 1. 2. 3. 4. 5. 6. Prepare the analysis…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question #4 please!

**Net Income and Dividends Analysis**

This data table provides the net income and dividend figures for the years 2018, 2019, and 2020. Each year includes corresponding figures for net income and dividends:

- **2018:**
- Net Income: $900
- Dividends: $150

- **2019:**
- Net Income: $940
- Dividends: $150

- **2020:**
- Net Income: $975
- Dividends: $150

**Required Steps for Financial Analysis:**

1. **Prepare the Analysis:**
- Analyze the acquisition date, including the unamortized differential from January 1, 2018, through 2020.

2. **Calculate Investment Balance:**
- Determine the balance in the Investment in Sub account as of December 31, 2020. Ensure all calculations are shown.

3. **Journal Entries for Company P:**
- Record the appropriate journal entries that Company P made concerning its investment in Company S for the year ending December 31, 2020.

4. **Consolidated Net Income Calculation:**
- Separately calculate the consolidated net income for the year 2020.

5. **Prepare Elimination Entries:**
- Prepare all necessary elimination entries for the year ending 2020.

6. **Complete Consolidated Workpapers:**
- Finalize the consolidated workpapers for the year ending December 31, 2020.

These tasks are essential for accurate financial reporting and consolidation of financial statements.

On January 2, 2018, Company P acquired 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 as of the acquisition date:

| Asset | Book Value | Fair Value | Remaining Life |
|----------------------|------------|------------|----------------|
| Patented technology | $140 | $2,240 | 7 years |
| Computer software | $60 | $1,260 | 12 years |

As of December 31, 2020, Company S owes Company P $20.

Company S's remaining identifiable assets and liabilities had acquisition-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:

Expert Solution

Step 1

SOLUTION:-

a.)

Acquisition Analysis:	Amt (in $)
Book Value	2500
Purchase price	6000
Goodwill	3500
Fair Value
Book Value	2500
Plus excess of book value	3300
Net asset fair value	5800
Purchase price	6000
Goodwill at FV	200

b.)

Excess amortisation/depreciation
Patented technology	=excess of fair value over book value/useful life
	= 2100/7
	= 300
Computer software	= 1200/12
	= 100

c.)

Acquisition differential amortisation and impairment schedule
Patented technology	Patented technology	Differential	Computer software	Differential
	140	2100	60	1200
Amortisation/depreciation 2018	20	300	5	100
	120	1800	55	1100
Amortisation/depreciation 2019	20	300	5	100
	100	1500	50	1000
Amortisation/depreciation 2020	20	300	5	100
	80	1200	45	900

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