On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez's financial records, were estimated to have a 20-year future life. As of December 31, the financial statements appeared as follows: Revenues Cost of goods sold Expenses Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash and receivables Inventory Investment in Suarez. Equipment (net) Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities $ Jarel (300,000) 140,000 20,000 $ (140,000) $ (300,000) (140,000) 0 $ (440,000) $(260,000). $ 210,000 $ 90,000 150,000 260,000 440,000 110,000 6 300,000 $ 500,000 $(140,000) (100,000) (260, 000) $(500,000) $ 1,060,000 $ (420,000) (200,000) (440,000) $(1,060,000) Suarez $(200,000) 80,000 10,000 $(110,000) $(156, 000) (110,000) 8 Included in the preceding statements, Jarel sold inventory costing $80,000 to Suarez for $100,000 of these goods, Suarez still owns 60 percent on December 31. What is the consolidated total for inventory at December 31?
On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez's financial records, were estimated to have a 20-year future life. As of December 31, the financial statements appeared as follows: Revenues Cost of goods sold Expenses Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash and receivables Inventory Investment in Suarez. Equipment (net) Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities $ Jarel (300,000) 140,000 20,000 $ (140,000) $ (300,000) (140,000) 0 $ (440,000) $(260,000). $ 210,000 $ 90,000 150,000 260,000 440,000 110,000 6 300,000 $ 500,000 $(140,000) (100,000) (260, 000) $(500,000) $ 1,060,000 $ (420,000) (200,000) (440,000) $(1,060,000) Suarez $(200,000) 80,000 10,000 $(110,000) $(156, 000) (110,000) 8 Included in the preceding statements, Jarel sold inventory costing $80,000 to Suarez for $100,000 of these goods, Suarez still owns 60 percent on December 31. What is the consolidated total for inventory at December 31?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The
remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment
(five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret
formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez's financial records, were
estimated to have a 20-year future life.
As of December 31, the financial statements appeared as follows:
Revenues
Cost of goods sold
Expenses
Net income
Retained earnings, 1/1
Net income
Dividends declared
Retained earnings, 12/31
Cash and receivables.
Inventory
Investment in Suarez.
Equipment (net)
Total assets
Liabilities
Common stock
Retained earnings, 12/31
Total liabilities and equities
$
Jarel
(300,000)
140,000
20,000
$ (140,000) $(110,000)
$ (300,000)
$(150,000)
(140,000) (110,000)
0
0
Suarez
$(200,000)
80,000
10,000
$ (440,000) $(260,000)
$ 210,000
$ 90,000
150,000
260,000
440,000
110,000
6
300,000
$ 500,000
$(140,000)
(100,000)
(260,000)
$(500,000)
$ 1,060,000
$ (420,000)
(200,000)
(440,000)
$(1,060,000)
Included in the preceding statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods,
Suarez still owns 60 percent on December 31.
What is the consolidated total for inventory at December 31?
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