Matthews Co. acquired all of the common stock of Jackson Co. on January 1, 2020. As of that date, Jackson had the following trial balance:DebitCreditAccounts payable$ 60,000Accounts receivable$ 50,000Additional paid-in capital60,000Buildings (net) (20-year life)140,000Cash and short-term investments70,000Common stock300,000Equipment (net) (8-year life)Intangible assets (indefinite life)240,000110,000Land90,000Long-term liabilities (mature 12/31/22)Retained earnings, 1/1/20Supplies180,000120,00020,000Totals$ 720,000 $ 720,000During 2020, Jackson reported net income of $96,000 while paying dividends of $12,000. During 2021, Jackson reported net income of $132,000 while paying dividends of $36,000. Assume that Matthews Co.acquired the common stock of Jackson Co. for $588,000 in cash. As of January 1, 2020, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at$216,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 10 years.Matthews decided to use the equity method for this investment.Required:(A.) Prepare consolidation worksheet entries for December 31, 2020.(B.) Prepare consolidation worksheet entries for December 31, 2021.

Particulars Amount Life Annual Amortization Purchase Price of Jackson Co. $588,000 Book…

estments 70,000 300,000 life) 240,000 nite life) 110,000 90,000 ture 12/31/22) 180,000 120,000 20,000 $ 720,000 $ 720,000 orted net income of $96,000 while paying dividends of $12,000. During 2021, Jackson reported r ock of Jackson Co. for $588,000 in cash. As of January 1, 2020, Jackson's land had a fair value of $ consideration transferred over fair value of assets and liabilities acquired is due to an unamortiz e the equity method for this investment.

estments 70,000 300,000 life) 240,000 nite life) 110,000 90,000 ture 12/31/22) 180,000 120,000 20,000 $ 720,000 $ 720,000 orted net income of $96,000 while paying dividends of $12,000. During 2021, Jackson reported r ock of Jackson Co. for $588,000 in cash. As of January 1, 2020, Jackson's land had a fair value of $ consideration transferred over fair value of assets and liabilities acquired is due to an unamortiz e the equity method for this investment.

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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