On January 1, 2020, Adamson, Inc. acquired the outstanding voting common stock of Skyview Corp. for $600,000. Of this payment, $85,000 was allocated to undervalued equipment (with a five-year life). Any remaining excess was attributable to goodwill. During 2020, Adamson bought inventory for $44,000 and sold it to Skyview for $98,500. 60% of these goods were still in the company's possession on December 31. The financial statements of the two companies as of December 31, 2020 are presented below. Adamson Skyview Sales revenue $ 750,000 $440,000 Cost of goods sold (414,975 ) (69,000 ) Gross profit 335,025 371,000 Operating expenses (65,000 ) (75,000 ) Income (loss) from subsidiary 246,300 0 Net Income $ 516,325 $296,000 Retained Earnings, 1/1/20 $ 670,000 $258,000 Net income 516,325 296,000 Dividends (15,000 ) (12,000 ) Retained Earnings, 12/31/20 $1,171,325 $542,000 Cash and receivables $ 325,000 $ 90,000 Inventory 440,000 126,000 Equity investment 834,300 0 Property, plant & equipment (Net) 1,273,025 635,000 Total Assets $2,872,325 $851,000 Accounts payable $ 652,000 $ 75,000 Accrued liabilities 245,000 56,000 Common stock 152,000 34,000 Additional paid-in capital 652,000 144,000 Retained Earnings, 12/31/20 1,171,325 542,000 Total Liabilities and Equities $2,872,325 $851,000 What is the consolidated balance for property, plant and equipment (net) on the December 31, 2020 balance sheet? Select one: A. $1,908,025 B. $1,987,025 C. $1,993,025 D. $1,976,025

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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On January 1, 2020, Adamson, Inc. acquired the outstanding voting common stock of Skyview Corp. for $600,000. Of this payment, $85,000 was allocated to undervalued equipment (with a five-year life). Any remaining excess was attributable to goodwill.

During 2020, Adamson bought inventory for $44,000 and sold it to Skyview for $98,500. 60% of these goods were still in the company's possession on December 31. The financial statements of the two companies as of December 31, 2020 are presented below.

	Adamson		Skyview
Sales revenue	$ 750,000		$440,000
Cost of goods sold	(414,975	)	(69,000	)
Gross profit	335,025		371,000
Operating expenses	(65,000	)	(75,000	)
Income (loss) from subsidiary	246,300		0
Net Income	$ 516,325		$296,000

Retained Earnings, 1/1/20	$ 670,000		$258,000
Net income	516,325		296,000
Dividends	(15,000	)	(12,000	)
Retained Earnings, 12/31/20	$1,171,325		$542,000

Cash and receivables	$ 325,000		$ 90,000
Inventory	440,000		126,000
Equity investment	834,300		0
Property, plant & equipment (Net)	1,273,025		635,000
Total Assets	$2,872,325		$851,000

Accounts payable	$ 652,000		$ 75,000
Accrued liabilities	245,000		56,000
Common stock	152,000		34,000
Additional paid-in capital	652,000		144,000
Retained Earnings, 12/31/20	1,171,325		542,000
Total Liabilities and Equities	$2,872,325		$851,000

What is the consolidated balance for property, plant and equipment (net) on the December 31, 2020 balance sheet?

Select one:

A. $1,908,025

B. $1,987,025

C. $1,993,025

D. $1,976,025

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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