On January 1, 2015, Packard Corporation acquired 70% of the common stock of Stude Corporation for $400,000. On this date, Stude had the following balance sheet: Stude Corporation Balance Sheet January 1, 2015 Assets Liabilities and Equity $ 60,000 40,000 60,000 200,000 (50,000) 72,000 Accounts payable . Bonds payable Common stock ($1 par).….. Paid-in capital in excess of par.. Retained earnings .. $ 40,000 100,000 10,000 90,000 112,000 Accounts receivable Inventory .. Land.... Buildings . Accumulated depreciation Equipment ...... Accumulated depreciation (30,000) $352,000 Total liabilities and equity ... Total assets.. $352,000 Buildings, which have a 20-year life, were understated by $150,000. Equipment, which has a 5-year life, was understated by $60,000. The 3,000 NCI shares had a fair (continued) value of $50 each. Any remaining excess was considered to be goodwill. Packard used the simple equity method to account for its investment in Stude. Packard and Stude had the following trial balances on December 31, 2016: Packard Stude Corporation Corporation Cash ...... 66,000 132,000 45,000 Accounts Receivable 90,000 Inventory .. Land...... 120,000 56,000 60,000 100,000 428,000 800,000 (220,000) 150,000 (90,000) (60,000) Investment in Stude Buildings Accumulated Depreciation Equipment .... Accumulated Depreciation Accounts Payable ... Bonds Payable... 200,000 (65,000) 72,000 (46,000) (102,000) (100,000) (10,000) (90,000) (142,000) .... Common Stock (100,000) (800,000) (325,000) (800,000) 450,000 Paid-In Capital in Excess of Par . Retained Earnings, January 1, 2016...... Sales ... Cost of Goods Sold .. Depreciation Expense Buildings. Depreciation Expense Equipment. Other Expenses... Interest Expense.. Subsidiary Income. Dividends Declared.. (350,000) 208,500 7,500 8,000 98,000 8,000 30,000 15,000 140,000 (14,000) 20,000 10,000 Totals.....
On January 1, 2015, Packard Corporation acquired 70% of the common stock of Stude Corporation for $400,000. On this date, Stude had the following balance sheet: Stude Corporation Balance Sheet January 1, 2015 Assets Liabilities and Equity $ 60,000 40,000 60,000 200,000 (50,000) 72,000 Accounts payable . Bonds payable Common stock ($1 par).….. Paid-in capital in excess of par.. Retained earnings .. $ 40,000 100,000 10,000 90,000 112,000 Accounts receivable Inventory .. Land.... Buildings . Accumulated depreciation Equipment ...... Accumulated depreciation (30,000) $352,000 Total liabilities and equity ... Total assets.. $352,000 Buildings, which have a 20-year life, were understated by $150,000. Equipment, which has a 5-year life, was understated by $60,000. The 3,000 NCI shares had a fair (continued) value of $50 each. Any remaining excess was considered to be goodwill. Packard used the simple equity method to account for its investment in Stude. Packard and Stude had the following trial balances on December 31, 2016: Packard Stude Corporation Corporation Cash ...... 66,000 132,000 45,000 Accounts Receivable 90,000 Inventory .. Land...... 120,000 56,000 60,000 100,000 428,000 800,000 (220,000) 150,000 (90,000) (60,000) Investment in Stude Buildings Accumulated Depreciation Equipment .... Accumulated Depreciation Accounts Payable ... Bonds Payable... 200,000 (65,000) 72,000 (46,000) (102,000) (100,000) (10,000) (90,000) (142,000) .... Common Stock (100,000) (800,000) (325,000) (800,000) 450,000 Paid-In Capital in Excess of Par . Retained Earnings, January 1, 2016...... Sales ... Cost of Goods Sold .. Depreciation Expense Buildings. Depreciation Expense Equipment. Other Expenses... Interest Expense.. Subsidiary Income. Dividends Declared.. (350,000) 208,500 7,500 8,000 98,000 8,000 30,000 15,000 140,000 (14,000) 20,000 10,000 Totals.....
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Refer to the preceding facts for Packard’s acquisition of Stude common stock. On January 1, 2016, Packard held merchandise acquired from Stude for $10,000. This beginning inventory had an applicable gross profit of 25%. During 2016, Stude sold $40,000 worth of merchandise to Packard. Packard held $6,000 of this merchandise at December 31, 2016. This ending inventory had an applicable gross profit of 30%. Packard owed Stude $11,000 on December 31 as a result of these intercompany sales.
1. Prepare a value analysis and a determination and distribution of excess schedule for the investment in Stude.
2. Complete a consolidated worksheet for Packard Corporation and its subsidiary Stude Corporation as of December 31, 2016. Prepare supporting amortization and income distribution schedules.
Transcribed Image Text:On January 1, 2015, Packard Corporation acquired 70% of the common stock of Stude
Corporation for $400,000. On this date, Stude had the following balance sheet:
Stude Corporation
Balance Sheet
January 1, 2015
Assets
Liabilities and Equity
$ 60,000
40,000
60,000
200,000
(50,000)
72,000
Accounts payable .
Bonds payable
Common stock ($1 par).…..
Paid-in capital in excess of par..
Retained earnings ..
$ 40,000
100,000
10,000
90,000
112,000
Accounts receivable
Inventory ..
Land....
Buildings .
Accumulated depreciation
Equipment ......
Accumulated depreciation
(30,000)
$352,000
Total liabilities and equity ...
Total assets..
$352,000
Buildings, which have a 20-year life, were understated by $150,000. Equipment,
which has a 5-year life, was understated by $60,000. The 3,000 NCI shares had a fair
(continued)
Transcribed Image Text:value of $50 each. Any remaining excess was considered to be goodwill. Packard used the
simple equity method to account for its investment in Stude.
Packard and Stude had the following trial balances on December 31, 2016:
Packard
Stude
Corporation
Corporation
Cash ......
66,000
132,000
45,000
Accounts Receivable
90,000
Inventory ..
Land......
120,000
56,000
60,000
100,000
428,000
800,000
(220,000)
150,000
(90,000)
(60,000)
Investment in Stude
Buildings
Accumulated Depreciation
Equipment ....
Accumulated Depreciation
Accounts Payable ...
Bonds Payable...
200,000
(65,000)
72,000
(46,000)
(102,000)
(100,000)
(10,000)
(90,000)
(142,000)
....
Common Stock
(100,000)
(800,000)
(325,000)
(800,000)
450,000
Paid-In Capital in Excess of Par .
Retained Earnings, January 1, 2016......
Sales ...
Cost of Goods Sold ..
Depreciation Expense Buildings.
Depreciation Expense Equipment.
Other Expenses...
Interest Expense..
Subsidiary Income.
Dividends Declared..
(350,000)
208,500
7,500
8,000
98,000
8,000
30,000
15,000
140,000
(14,000)
20,000
10,000
Totals.....
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 5 steps with 12 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