Nick NV acquired 90% of Kim NV’s interest on January 1, 2014, by paying $9,000,000 in cash. At that time, Kim NV’s net assets were $9,000,000. It was also identified that some of Kim NV’s net assets book values were different from the fair values. The inventory was overvalued by $100,000, and the building-having 6 years of useful life remaining-was undervalued by $600,000. The separate financial statements of Nick NV and Kim NV on December 31, 2014 are as follows (in thousands): Nick NV Kim NV Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales $ 9,800 $4,700 Income from Kim NV $ 450 - Cost of Sales ($ 6,100) ($3,000) Depreciation expenses ($ 1,000) ($ 500) Other expenses ($ 150) ($ 700) Net Income $ 3,000 $ 500 Add : Beginning Retained January 1 $11,200 $ 4,000 Deduct : Dividends ($ 600) ($ 100) Retained earnings December 31 $13,600 $ 4,400 Balance Sheet at December 31 Cash $ 1,800 $ 100 Accounts Receivable-net $ 1,400 $ 600 Inventories $ 2,000 $ 1,600 Other current assets $ 1,000 $ 900 Land $ 3,300 $ 2,800 Buildings-net $ 4,000 $ 3,400 Equipment-net $ 2,100 $ 1,900 Investment in Kim NV $ 9,360 -_______ Total Assets $24,960 $11,300 Accounts payable $ 4,100 $ 1,300 Other liabilities $ 3,860 $ 600 Capital Stock, $10 par $ 3,400 $ 5,000 Retained earnings $13,600 $ 4,400 Total liabilities and equities $24,960 $11,300 Kim NV’s accounts payable include $200,000 to Nick NV. REQUIRED : Prepare consolidation workpapers for Kim NV and subsidiary for the year ended December 31, 2014
Nick NV acquired 90% of Kim NV’s interest on January 1, 2014, by paying $9,000,000 in cash. At that time, Kim NV’s net assets were $9,000,000. It was also identified that some of Kim NV’s net assets book values were different from the fair values. The inventory was overvalued by $100,000, and the building-having 6 years of useful life remaining-was undervalued by $600,000. The separate financial statements of Nick NV and Kim NV on December 31, 2014 are as follows (in thousands):
|
|
Nick NV |
Kim NV |
|
Combined Income and |
|
|
|
Sales |
$ 9,800 |
$4,700 |
|
Income from Kim NV |
$ 450 |
- |
|
Cost of Sales |
($ 6,100) |
($3,000) |
|
|
($ 1,000) |
($ 500) |
|
Other expenses |
($ 150) |
($ 700) |
|
Net Income |
$ 3,000 |
$ 500 |
|
Add : Beginning Retained January 1 |
$11,200 |
$ 4,000 |
|
Deduct : Dividends |
($ 600) |
($ 100) |
|
Retained earnings December 31 |
$13,600 |
$ 4,400 |
|
|
|
|
|
|
|
|
|
Cash |
$ 1,800 |
$ 100 |
|
|
$ 1,400 |
$ 600 |
|
Inventories |
$ 2,000 |
$ 1,600 |
|
Other current assets |
$ 1,000 |
$ 900 |
|
Land |
$ 3,300 |
$ 2,800 |
|
Buildings-net |
$ 4,000 |
$ 3,400 |
|
Equipment-net |
$ 2,100 |
$ 1,900 |
|
Investment in Kim NV |
$ 9,360 |
-_______ |
|
Total Assets |
$24,960 |
$11,300 |
|
Accounts payable |
$ 4,100 |
$ 1,300 |
|
Other liabilities |
$ 3,860 |
$ 600 |
|
Capital Stock, $10 par |
$ 3,400 |
$ 5,000 |
|
Retained earnings |
$13,600 |
$ 4,400 |
|
Total liabilities and equities |
$24,960 |
$11,300 |
Kim NV’s accounts payable include $200,000 to Nick NV.
REQUIRED :
Prepare consolidation workpapers for Kim NV and subsidiary for the year ended December 31, 2014.
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