E 3-7 Prepare consolidated income statements with and without fair value/book value differentials Summary income statement information for Pam Corporation and its 70 percent–owned subsidiary, Sun, for the year 2017 is as follows (in thousands): Pam Sun Sales $4,000 $ 1,600 Income from Sun 196 — Cost of sales (2,400) (800) Depreciation expense (200) (160) Other expenses (796) (360) Net income $ 800 $ 280 Required Assume that Pam acquired its 70 percent interest in Sun at book value on January 1, 2016, when the fair value of Sun’s assets and liabilities were equal to recorded book values. There were no intercompany transactions during 2016 and 2017. Prepare a consolidated income statement for Pam Corporation and Subsidiary for 2017. Assume that Pam acquired its 70 percent interest in Sun on January 1, 2016, for $560,000. $120,000 was allocated to a reduction of overvalued equipment with a five-year remaining useful life and the remainder was allocated to goodwill. Sun’s book value was $640,000. There were no intercompany transactions during 2016 and 2017. Prepare a consolidated income statement for Pam Corporation and Subsidiary for 2017.
E 3-7 Prepare consolidated income statements with and without fair value/book value differentials
Summary income statement information for Pam Corporation and its 70 percent–owned subsidiary, Sun, for the year 2017 is as follows (in thousands):
|
|
Pam |
Sun |
|---|---|---|
|
Sales |
$4,000 |
$ 1,600 |
|
Income from Sun |
196 |
— |
|
Cost of sales |
(2,400) |
(800) |
|
|
(200) |
(160) |
|
Other expenses |
(796) |
(360) |
|
Net income |
$ 800 |
$ 280 |
Required
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Assume that Pam acquired its 70 percent interest in Sun at book value on January 1, 2016, when the fair value of Sun’s assets and liabilities were equal to recorded book values. There were no intercompany transactions during 2016 and 2017. Prepare a consolidated income statement for Pam Corporation and Subsidiary for 2017.
-
Assume that Pam acquired its 70 percent interest in Sun on January 1, 2016, for $560,000. $120,000 was allocated to a reduction of overvalued equipment with a five-year remaining useful life and the remainder was allocated to
goodwill . Sun’s book value was $640,000. There were no intercompany transactions during 2016 and 2017. Prepare a consolidated income statement for Pam Corporation and Subsidiary for 2017.
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