Angela Corporation (a private company) acquired all of the outstanding voting stock of Eddy Tech, Inc., on January 1, 2021, in exchangefor $9,840,000 in cash. At the acquisition date, Eddy Tech's stockholders' equity was $7,260,000 including retained earnings of$3,405,000.At the acquisition date, Angela prepared the following fair value allocation schedule for its newly acquired subsidiary:$ 9,840,0007,260,000$ 2,580,000Consideration transferredEddy's stockholder's equityExcess fair over book valueto patented technology (5-year remaining life)to trade names (indefinite remaining life)to equipment (8-year remaining life)$177,000534,50088,000799,500Goodwill$ 1,780,500At the end of 2021, Angela and Eddy Tech report the following amounts from their individually maintained account balances, beforeconsideration of their parent-subsidiary relationship. Parentheses indicate a credit balance.SalesCost of goods soldDeprAmortization expenseAngela$ (7,942,500)3,998, 250530,000323,000Eddy Tech$ (2,455,000)1,327, 50063,20013,000expenseOther operating expenses85,60055,800Net income2$(3,005,650)2$(995,500)Required:Prepare a 2021 consolidated income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company,elects to amortize goodwill over a 10-year period. Angela$ (7,942,500)3,998,250530,000323,000Eddy Tech(2,455,000)1,327,50063, 20013,000SalesCost of goods soldDepreciation expenseAmortization expenseOther operating expenses85,60055,800Net income$(3,005,650)$(995, 500)Required:Prepare a 2021 consolidated income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company,elects to amortize goodwill over a 10-year period.Angela Company and SubsidiaryConsolidated Income StatementFor the year ended December 31, 2021

Answered: Angela Corporation (a private company)…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Angela Corporation (a private company) acquired all of the outstanding voting stock of Eddy Tech, Inc., on January 1, 2021, in exchange
for $9,840,000 in cash. At the acquisition date, Eddy Tech's stockholders' equity was $7,260,000 including retained earnings of
$3,405,000.
At the acquisition date, Angela prepared the following fair value allocation schedule for its newly acquired subsidiary:
$ 9,840,000
7,260,000
$ 2,580,000
Consideration transferred
Eddy's stockholder's equity
Excess fair over book value
to patented technology (5-year remaining life)
to trade names (indefinite remaining life)
to equipment (8-year remaining life)
$177,000
534,500
88,000
799,500
Goodwill
$ 1,780,500
At the end of 2021, Angela and Eddy Tech report the following amounts from their individually maintained account balances, before
consideration of their parent-subsidiary relationship. Parentheses indicate a credit balance.
Sales
Cost of goods sold
Depr
Amortization expense
Angela
$ (7,942,500)
3,998, 250
530,000
323,000
Eddy Tech
$ (2,455,000)
1,327, 500
63,200
13,000
expense
Other operating expenses
85,600
55,800
Net income
2$
(3,005,650)
2$
(995,500)
Required:
Prepare a 2021 consolidated income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company,
elects to amortize goodwill over a 10-year period.

Angela
$ (7,942,500)
3,998,250
530,000
323,000
Eddy Tech
(2,455,000)
1,327,500
63, 200
13,000
Sales
Cost of goods sold
Depreciation expense
Amortization expense
Other operating expenses
85,600
55,800
Net income
$(3,005,650)
$
(995, 500)
Required:
Prepare a 2021 consolidated income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company,
elects to amortize goodwill over a 10-year period.
Angela Company and Subsidiary
Consolidated Income Statement
For the year ended December 31, 2021

Expert Solution

Step 1

A consolidated financial financial statement that includes all of the divisions or subsidiaries of a parent company. In the context of a company with a group of enterprises, the Financial Accounting Standards Board frequently employs a consolidated financial statement. In practice, however, many companies use consolidated financial statements to describe an aggregate report on the entire company, including its segments. A company's revenues and expenses are summarized in a consolidated financial statement. This financial statement provides information about the overall financial health of a parent company and its subsidiaries.

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