Consolidated Worksheet Preparation You will be creating and entering formulas to complete four worksheets. The first objective is to demonstrate the effect of different methods of accounting for the investments (equity, initial value, and partial equity) on the parent company’s trial balance and on the consolidated worksheet subsequent to acquisition. The second objective is to show the effect on consolidated balances and key financial ratios of recognizing a goodwill impairment loss. Project Scenario Pecos Company acquired 100 percent of Suaro’s outstanding stock for $1,450,000 cash on January 1, 2017, when Suaro had the following balance sheet:(THIS IS IN THE PICTURE) Following is the consolidated information worksheet. December 31, 2018, trial balances Pecos Suaro revenues $ (1,052,000) $ (427,000) operating expenses $ 821,000 $ 262,000 goodwill impairment loss ? income of Suaro ? net income ? $ (165,000) retained earnings- Pecos 1/1/18 ? retained earnings- Suaro 1/1/18 $ (201,000) net income (above) ? $ (165,000) dividends declared $ 200,000 $ 35,000 retained earnings- 12/31/18 ? $ (331,000) cash $ 195,000 $ 95,000 recievables $ 247,000 $ 143,000 inventory $ 415,000 $ 197,000 investment in Suaro ? land $ 341,000 $ 85,000 equipment (net) $ 240,100 $ 100,000 software $ 312,000 other intangibles $ 145,000 goodwill total assets ? $ 932,000 liabilities $ (1,573,100) $ (251,000) common stock $ (500,000) $ (350,000) retained earnings (above) ? $ (331,000) total liabilities and equity ? $ (932,000) fair-value allocation schedule price paid $ 1,450,000 book value $ 476,000 amorizations excess initial value $ 974,000 2017 2018 to land $ (10,000) ? ? to brand name $ 60,000 ? ? to software $ 100,000 ? ? to IPR&D $ 300,000 ? ? to goodwill $ 524,000 ? ? total $ 974,000 ? ? Suaros RE changes income dividends 2017 $ 75,000 $ - 2018 $ 165,000 $ 35,000 Input the consolidated information worksheet provided and complete the fair-value allocation schedule by computing the excess amortizations for 2017 and 2018.

Consolidated Worksheet Preparation You will be creating and entering formulas to complete four worksheets. The first objective is to demonstrate the effect of different methods of accounting for the investments (equity, initial value, and partial equity) on the parent company’s trial balance and on the consolidated worksheet subsequent to acquisition. The second objective is to show the effect on consolidated balances and key financial ratios of recognizing a goodwill impairment loss. Project Scenario Pecos Company acquired 100 percent of Suaro’s outstanding stock for $1,450,000 cash on January 1, 2017, when Suaro had the following balance sheet:(THIS IS IN THE PICTURE) Following is the consolidated information worksheet. December 31, 2018, trial balances Pecos Suaro revenues $ (1,052,000) $ (427,000) operating expenses $ 821,000 $ 262,000 goodwill impairment loss ? income of Suaro ? net income ? $ (165,000) retained earnings- Pecos 1/1/18 ? retained earnings- Suaro 1/1/18 $ (201,000) net income (above) ? $ (165,000) dividends declared $ 200,000 $ 35,000 retained earnings- 12/31/18 ? $ (331,000) cash $ 195,000 $ 95,000 recievables $ 247,000 $ 143,000 inventory $ 415,000 $ 197,000 investment in Suaro ? land $ 341,000 $ 85,000 equipment (net) $ 240,100 $ 100,000 software $ 312,000 other intangibles $ 145,000 goodwill total assets ? $ 932,000 liabilities $ (1,573,100) $ (251,000) common stock $ (500,000) $ (350,000) retained earnings (above) ? $ (331,000) total liabilities and equity ? $ (932,000) fair-value allocation schedule price paid $ 1,450,000 book value $ 476,000 amorizations excess initial value $ 974,000 2017 2018 to land $ (10,000) ? ? to brand name $ 60,000 ? ? to software $ 100,000 ? ? to IPR&D $ 300,000 ? ? to goodwill $ 524,000 ? ? total $ 974,000 ? ? Suaros RE changes income dividends 2017 $ 75,000 $ - 2018 $ 165,000 $ 35,000 Input the consolidated information worksheet provided and complete the fair-value allocation schedule by computing the excess amortizations for 2017 and 2018.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Consolidated Worksheet Preparation

You will be creating and entering formulas to complete four worksheets. The first objective is to demonstrate the effect of different methods of accounting for the investments (equity, initial value, and partial equity) on the parent company’s trial balance and on the consolidated worksheet subsequent to acquisition. The second objective is to show the effect on consolidated balances and key financial ratios of recognizing a goodwill impairment loss.

Project Scenario

Pecos Company acquired 100 percent of Suaro’s outstanding stock for $1,450,000 cash on January 1, 2017, when Suaro had the following balance sheet:(THIS IS IN THE PICTURE)

Following is the consolidated information worksheet.

December 31, 2018, trial balances

	Pecos	Suaro
revenues	$ (1,052,000)	$ (427,000)
operating expenses	$ 821,000	$ 262,000
goodwill impairment loss	?
income of Suaro	?
net income	?	$ (165,000)

retained earnings- Pecos 1/1/18	?
retained earnings- Suaro 1/1/18		$ (201,000)
net income (above)	?	$ (165,000)
dividends declared	$ 200,000	$ 35,000
retained earnings- 12/31/18	?	$ (331,000)

cash	$ 195,000	$ 95,000
recievables	$ 247,000	$ 143,000
inventory	$ 415,000	$ 197,000
investment in Suaro	?



land	$ 341,000	$ 85,000
equipment (net)	$ 240,100	$ 100,000
software		$ 312,000
other intangibles	$ 145,000
goodwill
total assets	?	$ 932,000

liabilities	$ (1,573,100)	$ (251,000)
common stock	$ (500,000)	$ (350,000)
retained earnings (above)	?	$ (331,000)
total liabilities and equity	?	$ (932,000)

fair-value allocation schedule
price paid	$ 1,450,000
book value	$ 476,000	amorizations
excess initial value	$ 974,000	2017	2018
to land	$ (10,000)	?	?
to brand name	$ 60,000	?	?
to software	$ 100,000	?	?
to IPR&D	$ 300,000	?	?
to goodwill	$ 524,000	?	?
total	$ 974,000	?	?

Suaros RE changes	income	dividends
2017	$ 75,000	$ -
2018	$ 165,000	$ 35,000

Input the consolidated information worksheet provided and complete the fair-value allocation schedule by computing the excess amortizations for 2017 and 2018.

Transcribed Image Text:Project Scenario Pecos Company acquired 100 percent of Suaro's outstanding stock for $1,450,000 cash on January 1, 2017, when Suaro had the following balance sheet: Assets Liabilities and Equity $ 37,000 82,000 Cash Liabilities.. $(422,000) Receivables Inventory.. Land.... Common stock ... Retained earnings. (350,000) (1 26,000) 149,000 90,000 Equipment (net). Software. 225,000 315,000 Total assets $898,000 Total liabilities and equity ... $(898,000) At the acquisition date, the fair values of each identifiable asset and liability that differed from book value were as follows: Land $ 80,000 Brand name (indefinite life-unrecognized on Suaro's books) (2-year estimated remaining useful life) 60,000 Software 415,000 In-process R&D 300,000 Additional Information • Although at acquisition date Pecos expected future benefits from Suaro's in-process research and development (R&D), by the end of 2017 it became clear that the research project was a failure with no future economic benefits. During 2017, Suaro earns $75,000 and pays no dividends. • Selected amounts from Pecos and Suaro's separate financial statements at December 31, 2018, are presented in the consolidated information worksheet. All consolidated worksheets are to be prepared as of December 31, 201 two years subsequent to acquisition. • Pecos's January 1, 2018, Retained Earnings balance-before any effect from Suaro's 2017 income-is $(930,000) (credit balance). • Pecos has 500,000 common shares outstanding for EPS calculations and reported $2,943,100 for consolidated assets at the beginning of the period.

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