Income Statement Sales.. Cost of goods sold. Gross profit.. Equity income. Operating expenses.. Net income... Statement of retained earnings: BOY retained earnings. Net income.. Dividends. Ending retained earnings. a. b. C. Parent Subsidiary $2,550,000 $1,479,000 Assets (1,360,000) (816,000) Cash... 1,190,000 663,000 153,000 (1.020,000 0,000) pg. 178 $323,000 $ 153,000 Balance sheet: $ 850,000 $ 85.000 323,000 153,000 (119,000) (42,500) $1,054,000 $ 195,500 Accounts receivable. Inventory... Equity investment. Property, plant and equipment (PPE), net. Liabilities and stockholders' equity Accounts payable... Accrued liabilities. Long-term liabilities Common stock.. APIC... Retained earnings ****** ******* ******* ********* ******* ************* Parent Subsidiary $ 204,000 $ 85,000 340,000 527,000 620,500 1,445,000 714,000 $3,136,500 $1,470,500 306,000 365,500 $ 212,500 $ 136,000 255,000 204,000 510,000 425,000 170,000 1,190,000 255,000 1,054,000 195,500 $3,136,500 $1,470,500 Prepare the journal entry to record the acquisition of the subsidiary. Show the computations to yield the Equity Investment reported by the parent in the amount of $620,500. Prepare the consolidation entries for the year ended December 31, 2022. 31 2003
Income Statement Sales.. Cost of goods sold. Gross profit.. Equity income. Operating expenses.. Net income... Statement of retained earnings: BOY retained earnings. Net income.. Dividends. Ending retained earnings. a. b. C. Parent Subsidiary $2,550,000 $1,479,000 Assets (1,360,000) (816,000) Cash... 1,190,000 663,000 153,000 (1.020,000 0,000) pg. 178 $323,000 $ 153,000 Balance sheet: $ 850,000 $ 85.000 323,000 153,000 (119,000) (42,500) $1,054,000 $ 195,500 Accounts receivable. Inventory... Equity investment. Property, plant and equipment (PPE), net. Liabilities and stockholders' equity Accounts payable... Accrued liabilities. Long-term liabilities Common stock.. APIC... Retained earnings ****** ******* ******* ********* ******* ************* Parent Subsidiary $ 204,000 $ 85,000 340,000 527,000 620,500 1,445,000 714,000 $3,136,500 $1,470,500 306,000 365,500 $ 212,500 $ 136,000 255,000 204,000 510,000 425,000 170,000 1,190,000 255,000 1,054,000 195,500 $3,136,500 $1,470,500 Prepare the journal entry to record the acquisition of the subsidiary. Show the computations to yield the Equity Investment reported by the parent in the amount of $620,500. Prepare the consolidation entries for the year ended December 31, 2022. 31 2003
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:<
Income Statement
Sales...
Cost of goods sold.
Gross profit..
Equity income..
Operating expenses.
Net income...
Statement of retained earnings:
BOY retained earnings...
Net income..
Dividends.
Ending retained earnings..
a.
b.
Parent Subsidiary
$2,550,000 $1,479,000
(1,360,000) (816,000) Cash......
1,190,000
663,000
153,000
(1,020,000
0,000)
pg. 178
$ 323,000 $153,000
Balance sheet:
Assets
$ 850,000 $ 85,000
323,000
(119,000)
153,000
(42,500)
$1,054,000 $ 195,500
Accounts receivable.
Inventory.
Equity investment..
Property, plant and equipment (PPE), net....
Liabilities and stockholders' equity
Accounts payable..
Accrued liabilities.
Long-term liabilities
Common stock.
APIC..
Retained earnings
Parent
$ 204,000 $ 85,000
340,000
306,000
527,000
365,500
620,500
1,445,000
714,000
$3,136,500 $1,470,500
Subsidiary
$ 212,500 $ 136,000
255,000
204,000
510,000
425,000
1,190,000
1,054,000
$3,136,500
C.
Prepare the consolidation entries for the year ended December 31, 2022.
d. Prepare the consolidated spreadsheet for the year ended December 31, 2022.
170,000
255,000
195,500
$1,470,500
Prepare the journal entry to record the acquisition of the subsidiary.
Show the computations to yield the Equity Investment reported by the parent in the amount of
$620,500.
Transcribed Image Text:46. Consolidation at the end of the first year subsequent to date of acquisition-Equity method
(purchase price equals book value)
Assume a parent company acquires its subsidiary on January 1, 2022, by exchanging 30,000 shares of
its $1 par value Common Stock, with a market value on the acquisition date of $17 per share, for all of
the outstanding voting shares of the acquiree. You have been charged with preparing the consolidation
of these two companies at the end of the first year.
On the acquisition date, all of the subsidiary's assets and liabilities had fair values equaling their
book values. The parent uses the equity method of pre-consolidation Equity investment bookkeeping.
Following are financial statements of the parent and its subsidiary for the year ended December 31,
2022.
LO2
X
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education