Arther Trent, Corporation Inc. Income Statement: Sales .... $(1,500,000) Dividend Income (from Trent, Inc.). Cost of Goods Sold .... Operating Expenses (includes depreciation). $(1,900,000) (40,000) 1,180,000 870,000 440,000 550,000 Net Income... $ (210,000) $ (190,000) Retained Earnings: Retained Earnings, January 1, 2018... Net Income .... Dividends Paid... $ (206,000) (190,000) 40,000 $ (356,000) $ (250,000) (210,000) ... Balance, December 31, 2018. . $ (460,000) Balance Sheet: Cash .... $ 285,000 $ 150,000 Accounts Receivable (net) 430,000 350,000 Inventories.... 530,000 660,000 410,000 680,000 (210,000) Land, Building, and Equipment Accumulated Depreciation ... Investment in Trent Inc., (at cost) Accounts Payable and Accrued Expenses. Common Stock ($10 par) .... Additional Paid-In Capital in Excess of Par Retained Earnings, December 31, 2018.. Totals ... (185,000) 750,000 (670,000) (1,200,000) (140,000) (544,000) (400,000) (80,000) (356,000) (460,000) 2$ $
Arther Corporation acquired all of the outstanding $10 par voting common stock of Trent Inc., on January 1, 2016, in exchange for 50,000 shares of its $10 par voting common stock. On December 31, 2015, the common stock of Arther had a closing market price of $15 per share on a national stock exchange. The
On December 31, 2018, after year-end adjustments but before the nominal accounts were closed, the companies had the following condensed statements: (see attachment)
Additional information is as follows:
a. There have been no changes in the common stock and additional paid-in capital in excess of par accounts since the one necessitated in 2016 by Arther’s acquisition of Trent, Inc.
b. At the acquisition date, the market value of Trent’s machinery exceeded book value by $54,000. This excess is being amortized over the asset’s estimated average remaining life of six years. The fair value of Trent’s other assets and liabilities were equal to book value. Any remaining excess is
c. On July 1, 2016, Arther sold a warehouse facility to Trent for $129,000 in cash. At the date of sale, Arther’s book values were $33,000 for the land and $66,000 for the building. Trent allocated the $129,000 purchase price to the land for $43,000 and to the building for $86,000. Trent is
d. During 2018, Arther purchased merchandise from Trent at an aggregate invoice price of $180,000, which included a 100% markup on Trent’s cost. On December 31, 2018, Arther owed Trent $75,000 on these purchases, and $36,000 of the merchandise purchased remained in Arther’s inventory.
Complete the vertical worksheet necessary to prepare the consolidated income statement and retained earnings statement for the year ended December 31, 2018, and a consolidated
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