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Determine the consolidated assets as of December 31.

Determine the consolidated assets as of December 31.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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BB-SS

On January 1, BB Acquired 60 percent of the outstanding voting stock of SS for P260,000 cash consideration. The remaining 40 percent of SS had an acquisition date fair value of P65,000. On January 1, SS possessed equipment (5-year life) that was undervalued on its books P25,000. SS also had developed several secret formulas that BB assessed at P50,000. Theses formulas, although not recorded on SS's financial records, were estimated to have a 20-year future life. BB also determined that the inventory of SS is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As of December 31, the financial statements appeared as follows: BB Revenues (from sales and dividends) Cost of goods sold Expenses P (300, 000) P (200, 000) 140, 000 80, 000 10, 000 P (140, 000) P (110, 000) 20, 000 Net Income Retained earnings 1/1 P (300, 000) P (150, 000) (110, 000) 10,000 P (440, 000) P (250, 000) Net Income (140, 000) Dividends paid Retained earnings 12/31 -0- Cash and Receivables P 210, 000 P90, 000 110, 000 Inventory Investment in SS Equipment (net) Total Assets 150, 000 260, 000 440, 000 P 1,060, 000 -0- 300, 000 P500, 000 Liabilities P (420, 000) P (150, 000) (200, 000) (440, 000) P (1,060,000) P (500, 000) Common stock (100, 000) (250, 000) Retained earnings 12/31 Total Liabilities and Equities Determine the consolidated assets as of December 31.
Transcribed Image Text:On January 1, BB Acquired 60 percent of the outstanding voting stock of SS for P260,000 cash consideration. The remaining 40 percent of SS had an acquisition date fair value of P65,000. On January 1, SS possessed equipment (5-year life) that was undervalued on its books P25,000. SS also had developed several secret formulas that BB assessed at P50,000. Theses formulas, although not recorded on SS's financial records, were estimated to have a 20-year future life. BB also determined that the inventory of SS is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As of December 31, the financial statements appeared as follows: BB Revenues (from sales and dividends) Cost of goods sold Expenses P (300, 000) P (200, 000) 140, 000 80, 000 10, 000 P (140, 000) P (110, 000) 20, 000 Net Income Retained earnings 1/1 P (300, 000) P (150, 000) (110, 000) 10,000 P (440, 000) P (250, 000) Net Income (140, 000) Dividends paid Retained earnings 12/31 -0- Cash and Receivables P 210, 000 P90, 000 110, 000 Inventory Investment in SS Equipment (net) Total Assets 150, 000 260, 000 440, 000 P 1,060, 000 -0- 300, 000 P500, 000 Liabilities P (420, 000) P (150, 000) (200, 000) (440, 000) P (1,060,000) P (500, 000) Common stock (100, 000) (250, 000) Retained earnings 12/31 Total Liabilities and Equities Determine the consolidated assets as of December 31.
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