Assets Liabilities and Equity Current liabilities ... Common stock ($10 par). . Retained earnings ... Total liabilities and equity ... Current assets $200,000 $100,000 Equipment (net) 300,000 100,000 300,000 Total assets.. $500,000 $500,000
Kraus Company has the following
On July 1, 2016, Neiman Company purchases 80% of the outstanding common stock of Kraus Company for $310,000. Any excess of book value over cost is attributed to the equipment, which has an estimated 5-year life. Kraus Company closes its books before the acquisition on July 1. On December 31, 2016, Neiman Company and Kraus Company prepare the following
Neiman Kraus (July 1–Dec. 31)
Current Assets . . . . . . . . . . . . . . . . . . . . 220,000 220,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . 500,000 300,000
Accumulated
Investment in Kraus Company . . . . . . . . . 310,000
Current Liabilities . . . . . . . . . . . . . . . . . . . . . (200,000) (70,000)
Common Stock ($10 par) . . . . . . . . . . . . . (200,000) (100,000)
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300,000) (100,000)
Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . 180,000 45,000
General Expenses . . . . . . . . . . . . . . . . . . . . . . . 60,000 25,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0
1. Prepare a determination and distribution of excess schedule for the investment (a value analysis is not needed).
2. Prepare all the eliminations and adjustments that would be made on the December 31, 2016, consolidated worksheet.
3. Prepare the 2016 consolidated income statement and its related income distribution schedules.
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