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: Jarel Suarez Revenue $(300000) $(200000) Cost of goods sold 140000 80000 Expenses 20000 10000 Net income $(140000) $(110000) Retained earnings,1/1 $(300000) $(150000) Net income (140000) (110000) Dividend declared -0- -0- Retained earnings 12/31 $(440000) $(260000) Cash and receivables $210000 $90000 Inventory 150000 110000 Investment in Suarez 260000 -0- Equipments (net) 440000 300000 Total assets $1060000 $500000 Liabilities $(420000) (140000) Common stock (200000) (100000) Retained earnings 12/31 (440000) (260000) Total liabilities and equities $(1060000) $(500000 Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.Choose the correct. What is the total of consolidated cost of goods sold?a. $140,000b. $152,000c. $132,000d. $145,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

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:

	Jarel	Suarez
Revenue	$(300000)	$(200000)
Cost of goods sold	140000	80000
Expenses	20000	10000
Net income	$(140000)	$(110000)
Retained earnings,1/1	$(300000)	$(150000)
Net income	(140000)	(110000)
Dividend declared	-0-	-0-
Retained earnings 12/31	$(440000)	$(260000)
Cash and receivables	$210000	$90000
Inventory	150000	110000
Investment in Suarez	260000	-0-
Equipments (net)	440000	300000
Total assets	$1060000	$500000
Liabilities	$(420000)	(140000)
Common stock	(200000)	(100000)
Retained earnings 12/31	(440000)	(260000)
Total liabilities and equities	$(1060000)	$(500000

Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.Choose the correct. What is the total of consolidated cost of goods sold?
a. $140,000
b. $152,000
c. $132,000
d. $145,000

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions