Pop Corporation paid $3,600,000 for a 90 percent interest in Son Corporation on January 1, 2016; Son's totalbook value was $3,600,000. The excess was allocated as follows: $120,000 to undervalued equipment with athree-year remaining useful life and $280,000 to goodwill. The income statements of Pop and Son for 2016are summarized as follows (in thousands):SalesIncome from SonCost of salesDepreciation expenseOther expensesNet incomePop$8,000360(4,000)(800)(1.600)$ 1,960Show Transcribed TextSon$3,200(1,600)(480)(720)$ 4001. Calculate the goodwill that should appear in the consolidated balance sheet of Pop and Subsidiary atDecember 31, 2016.2. Calculate consolidated net income for 2016.

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Answered: 1. Calculate the goodwill that should…

1. Calculate the goodwill that should appear in the consolidated balance sheet of Pop and Subsidiary at December 31, 2016. 2. Calculate consolidated net income for 2016.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Pop Corporation paid $3,600,000 for a 90 percent interest in Son Corporation on January 1, 2016; Son's total
book value was $3,600,000. The excess was allocated as follows: $120,000 to undervalued equipment with a
three-year remaining useful life and $280,000 to goodwill. The income statements of Pop and Son for 2016
are summarized as follows (in thousands):
Sales
Income from Son
Cost of sales
Depreciation expense
Other expenses
Net income
Pop
$8,000
360
(4,000)
(800)
(1.600)
$ 1,960
Show Transcribed Text
Son
$3,200
(1,600)
(480)
(720)
$ 400
1. Calculate the goodwill that should appear in the consolidated balance sheet of Pop and Subsidiary at
December 31, 2016.
2. Calculate consolidated net income for 2016.

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