Determining ending consolidated balances in the second year following the acquisition-Equity methodAssume that your company acquired a subsidiary on January 1, 2012. The purchase price was $500,000 in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date, andthat excess was assigned to the following [A] assets:[A] AssetProperty, plant and equipment (PPE), net $250,000Goodwill250,000$500,000Income statement:SalesCost of goods soldGross profitEquity incomeOperating expensesNet incomeOriginalOriginal Useful LifeAmount (years)The AAP asset relating to undervalued PPE with a 20-year useful life has been depreciated as part of the parent's equity method accounting. The financial statements of the parent and its subsidiaryfor the year ended December 31, 2013, are as follows:Parent SubsidiaryStatement of retained earnings:BOY retained earningsNet incomeDividendsEnding retained earnings20Indefinite175,500(825.000)$890,500$5,500,000 $1,220,000 Assets(3,960,000) (720,000) Cash1,540,000$3,614,300890,500(196,100)$4,308,700Balance sheet:Parent$620,000 Liabilities and stockholders' equity188,000 Accounts payable(25,200) Accrued liabilities$782,800 Long-term liabilitiesCommon stockAPICRetained earningsSubsidiary$1,005,550$329,2001.388.000 278,400500,000 Accounts receivableInventory2,134,000 357,6001,437,800(312,000) Equity investment$188,000 Property, plant and equipment (PPE), net 11,365,200 661,600$17,330,550 $1,626, 800$805,200 $111,400957,000 149.6007,000,000 400,000492,45080,0003,767,200100.0004,308,700782,800$17,330,550 $1,626,800 At what amount will the following accounts appear on the consolidated financial statements?Note: Do not use negative signs with your answers.a. Sales$0b. Equity income0c. Operating expenses0d. Accounts receivable00000$$e. Equity investmentf. Property plant and equipment (PPE) net $g. Goodwill$h. Common stock$i. Retained earnings$tAO

The equity method pertains to adjustment of subsidiary financial statement results in the respective…

Answered: At what amount will the following…

At what amount will the following accounts appear on the consolidated financial statements? Note: Do not use negative signs with your answers.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 20PC

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