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Allen Bradford Company Company $(190,000) 70,000 $ (485,000) 160,000 130,000 (66,000) $ (261,000) $ (659,000) (261,000) 175,500 $ (744,500) $ 268,000 Revenues . Cost of goods sold. Depreciation expense Subsidiary earnings Net income... 52,000 -0- Retained earnings, 1/1/18. . Net income (above) Dividends declared.. Retained earnings, 12/31/18. $ (68,000) $ (98,000) (68,000) 40,000 $(126,000) Current assets ... Investment in Bradford Company $ 75,000 216,000 427,500 713,000 -0- 58,000 161,000 Land.... Buildings and equipment (net) $ 1,624,500 $ (190,000) (600,000) (90,000) (744,500) $(1,624,500) Total assets . $ 294,000 Current liabilities. Common stock Additional paid-in capital. Retained earnings, 12/31/18 Total liabilities and equity $(103,000) (60,000) (5,000) (126,000) $(294,000)

Allen Bradford Company Company $(190,000) 70,000 $ (485,000) 160,000 130,000 (66,000) $ (261,000) $ (659,000) (261,000) 175,500 $ (744,500) $ 268,000 Revenues . Cost of goods sold. Depreciation expense Subsidiary earnings Net income... 52,000 -0- Retained earnings, 1/1/18. . Net income (above) Dividends declared.. Retained earnings, 12/31/18. $ (68,000) $ (98,000) (68,000) 40,000 $(126,000) Current assets ... Investment in Bradford Company $ 75,000 216,000 427,500 713,000 -0- 58,000 161,000 Land.... Buildings and equipment (net) $ 1,624,500 $ (190,000) (600,000) (90,000) (744,500) $(1,624,500) Total assets . $ 294,000 Current liabilities. Common stock Additional paid-in capital. Retained earnings, 12/31/18 Total liabilities and equity $(103,000) (60,000) (5,000) (126,000) $(294,000)

FINANCIAL ACCOUNTING
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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Allen Company acquired 100 percent of Bradford Company’s voting stock on January 1, 2014, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $14 per share). As of that date, Bradford had stockholders’ equity totaling $105,000. Land shown on Bradford’s accounting records was undervalued by $10,000. Equipment (with a five-year remaining life) was undervalued by $5,000. A secret formula developed by Bradford was appraised at $20,000 with an estimated life of 20 years.
Following are the separate financial statements for the two companies for the year ending December 31, 2018. There were no intra-entity payables on that date. Credit balances are indicated by parentheses.
a. Explain how Allen derived the $66,000 balance in the Subsidiary Earnings account.
b. Prepare a worksheet to consolidate the financial information for these two companies
Allen Bradford Company Company $(190,000) 70,000 $ (485,000) 160,000 130,000 (66,000) $ (261,000) $ (659,000) (261,000) 175,500 $ (744,500) $ 268,000 Revenues . Cost of goods sold. Depreciation expense Subsidiary earnings Net income... 52,000 -0- Retained earnings, 1/1/18. . Net income (above) Dividends declared.. Retained earnings, 12/31/18. $ (68,000) $ (98,000) (68,000) 40,000 $(126,000) Current assets ... Investment in Bradford Company $ 75,000 216,000 427,500 713,000 -0- 58,000 161,000 Land.... Buildings and equipment (net) $ 1,624,500 $ (190,000) (600,000) (90,000) (744,500) $(1,624,500) Total assets . $ 294,000 Current liabilities. Common stock Additional paid-in capital. Retained earnings, 12/31/18 Total liabilities and equity $(103,000) (60,000) (5,000) (126,000) $(294,000)
Transcribed Image Text:Allen Bradford Company Company $(190,000) 70,000 $ (485,000) 160,000 130,000 (66,000) $ (261,000) $ (659,000) (261,000) 175,500 $ (744,500) $ 268,000 Revenues . Cost of goods sold. Depreciation expense Subsidiary earnings Net income... 52,000 -0- Retained earnings, 1/1/18. . Net income (above) Dividends declared.. Retained earnings, 12/31/18. $ (68,000) $ (98,000) (68,000) 40,000 $(126,000) Current assets ... Investment in Bradford Company $ 75,000 216,000 427,500 713,000 -0- 58,000 161,000 Land.... Buildings and equipment (net) $ 1,624,500 $ (190,000) (600,000) (90,000) (744,500) $(1,624,500) Total assets . $ 294,000 Current liabilities. Common stock Additional paid-in capital. Retained earnings, 12/31/18 Total liabilities and equity $(103,000) (60,000) (5,000) (126,000) $(294,000)
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