ommon stock (having a fair value of $14 per share). As of that date, Bradford had stockholders' equity totaling $105,000. Land shown Bradford's accounting records was undervalued by $10,000. Equipment (with a five-year remaining life) was undervalued by $5,000. A ecret formula developed by Bradford was appraised at $20,000 with an estimated life of 20 years. The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no intra- ntity payables on that date. Credit balances are indicated by parentheses. Revenues Cost of goods sold Depreciation expense Subsidiary earnings Net income Retained earnings 1/1/21 Allen Company $ (485,000) 160,000 130,000 (66,000) $ (261,000) $ (659.000) Bradford Company $(190,000) 70,000 52,000 -0- $ (68,000) $ (98.000)
ommon stock (having a fair value of $14 per share). As of that date, Bradford had stockholders' equity totaling $105,000. Land shown Bradford's accounting records was undervalued by $10,000. Equipment (with a five-year remaining life) was undervalued by $5,000. A ecret formula developed by Bradford was appraised at $20,000 with an estimated life of 20 years. The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no intra- ntity payables on that date. Credit balances are indicated by parentheses. Revenues Cost of goods sold Depreciation expense Subsidiary earnings Net income Retained earnings 1/1/21 Allen Company $ (485,000) 160,000 130,000 (66,000) $ (261,000) $ (659.000) Bradford Company $(190,000) 70,000 52,000 -0- $ (68,000) $ (98.000)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![35. Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2017, by issuing 10,000 shares of its $10 par value
common stock (having a fair value of $14 per share). As of that date, Bradford had stockholders' equity totaling $105,000. Land shown on
Bradford's accounting records was undervalued by $10,000. Equipment (with a five-year remaining life) was undervalued by $5,000. A
secret formula developed by Bradford was appraised at $20,000 with an estimated life of 20 years.
The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no intra-
entity payables on that date. Credit balances are indicated by parentheses.
Revenues
Cost of goods sold
Depreciation expense
Subsidiary earnings
Net income
Retained earnings, 1/1/21
Net income (above)
Dividends declared
Retained earnings, 12/31/21
Current assets
Investment in Bradford Company
Land
Buildings and equipment (net)
Total assets
Current liabilities
Common stock
Additional paid-in capital
Retained earnings, 12/31/21
Total liabilities and equity
Allen
Company
$ (485,000)
160,000
130,000
(66,000)
$ (261,000)
$ (659,000)
(261,000)
175,500
$ (744,500)
$ 268,000
216,000
427,500
713,000
$ 1,624,500
$ (190,000)
Bradford
Company
$(190,000)
70,000
52,000
-0-
$ (68,000)
$ (98,000)
(68,000)
40,000
$(126,000)
$ 75,000
-0-
58,000
161,000
$ 294,000
$(103,000)
(60,000)
(600,000)
(90,000)
(5,000)
(744,500)
(126,000)
$(1,624,500)
$(294,000)
a. Explain how Allen derived the $66,000 balance in the Subsidiary Earnings account.
b. Prepare a worksheet to consolidate the financial information for these two companies.
Page 148](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe01d01a8-421e-4608-b0aa-c745933688af%2F0d822dd3-a00d-4d09-99a6-3615a56941bd%2F7rbsxm7_processed.png&w=3840&q=75)
Transcribed Image Text:35. Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2017, by issuing 10,000 shares of its $10 par value
common stock (having a fair value of $14 per share). As of that date, Bradford had stockholders' equity totaling $105,000. Land shown on
Bradford's accounting records was undervalued by $10,000. Equipment (with a five-year remaining life) was undervalued by $5,000. A
secret formula developed by Bradford was appraised at $20,000 with an estimated life of 20 years.
The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no intra-
entity payables on that date. Credit balances are indicated by parentheses.
Revenues
Cost of goods sold
Depreciation expense
Subsidiary earnings
Net income
Retained earnings, 1/1/21
Net income (above)
Dividends declared
Retained earnings, 12/31/21
Current assets
Investment in Bradford Company
Land
Buildings and equipment (net)
Total assets
Current liabilities
Common stock
Additional paid-in capital
Retained earnings, 12/31/21
Total liabilities and equity
Allen
Company
$ (485,000)
160,000
130,000
(66,000)
$ (261,000)
$ (659,000)
(261,000)
175,500
$ (744,500)
$ 268,000
216,000
427,500
713,000
$ 1,624,500
$ (190,000)
Bradford
Company
$(190,000)
70,000
52,000
-0-
$ (68,000)
$ (98,000)
(68,000)
40,000
$(126,000)
$ 75,000
-0-
58,000
161,000
$ 294,000
$(103,000)
(60,000)
(600,000)
(90,000)
(5,000)
(744,500)
(126,000)
$(1,624,500)
$(294,000)
a. Explain how Allen derived the $66,000 balance in the Subsidiary Earnings account.
b. Prepare a worksheet to consolidate the financial information for these two companies.
Page 148
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
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
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education