Palsley, Inc. Skyler Corporation $ (800,000) 528,000 180,000 $(400,000) 260,000 130,000 -0- Sales Cost of goods sold . Expenses .... Gain on sale of equipment (8,000) $ (100,000) $ (400,000) (100,000) 60,000 Net income.... $ (10,000) Retained earnings, 1/1. Net income... Dividends declared... Retained earnings, 12/31 $(150,000) (10,000) -0- $ (440,000) $(160,000) $ 40,000 Cash ... 30,000 300,000 260,000 Accounts receivable.. Inventory.. Investment in Skyler Corporation. Land, buildings, and equipment. Accumulated depreciation 100,000 180,000 560,000 -0- 680,000 500,000 (180,000) $ 1,650,000 $ (140,000) (240,000) -0- (90,000) $ 730,000 $ (90,000) (180,000) (100,000) (200,000) -0- Total assets . Accounts payable. Long-term liabilities. Preferred stock . (620,000) (210,000) (440,000) $(1,650,000) Common stock Additional paid-in capital. Retained earnings, 12/31 (160,000) $(730,000) Total liabilities and equity
Palsley, Inc. Skyler Corporation $ (800,000) 528,000 180,000 $(400,000) 260,000 130,000 -0- Sales Cost of goods sold . Expenses .... Gain on sale of equipment (8,000) $ (100,000) $ (400,000) (100,000) 60,000 Net income.... $ (10,000) Retained earnings, 1/1. Net income... Dividends declared... Retained earnings, 12/31 $(150,000) (10,000) -0- $ (440,000) $(160,000) $ 40,000 Cash ... 30,000 300,000 260,000 Accounts receivable.. Inventory.. Investment in Skyler Corporation. Land, buildings, and equipment. Accumulated depreciation 100,000 180,000 560,000 -0- 680,000 500,000 (180,000) $ 1,650,000 $ (140,000) (240,000) -0- (90,000) $ 730,000 $ (90,000) (180,000) (100,000) (200,000) -0- Total assets . Accounts payable. Long-term liabilities. Preferred stock . (620,000) (210,000) (440,000) $(1,650,000) Common stock Additional paid-in capital. Retained earnings, 12/31 (160,000) $(730,000) Total liabilities and equity
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On January 1, Paisley, Inc., paid $560,000 for all of Skyler Corporation’s outstanding stock. This cash payment was based on a price of $180 per share for Skyler’s $100 par value preferred stock and $38 per share for its $20 par value common stock. The preferred shares are voting, cumulative, and fully participating. At the acquisition date, the book values of Skyler’s accounts equaled their fair values. Any excess fair value is assigned to an intangible asset and will be amortized over a 10-year period.
During the year, Skyler sold inventory costing $60,000 to Paisley for $90,000. All but $18,000 (measured at transfer price) of this merchandise has been resold to outsiders by the end of the year. At the end of the year, Paisley continues to owe Skyler for the last shipment of inventory priced at $28,000.
Also, on January 2 Paisley sold Skyler equipment for $20,000 although it had a carrying amount of only $12,000 (original cost of $30,000). Both companies depreciate such property according to the straight-line method with no salvage value. The remaining life at this date was four years.
The following financial statements are for each company for the year ending December 31. Determine consolidated financial totals for this business combination.
Transcribed Image Text:Palsley, Inc.
Skyler
Corporation
$ (800,000)
528,000
180,000
$(400,000)
260,000
130,000
-0-
Sales
Cost of goods sold .
Expenses ....
Gain on sale of equipment
(8,000)
$ (100,000)
$ (400,000)
(100,000)
60,000
Net income....
$ (10,000)
Retained earnings, 1/1.
Net income...
Dividends declared...
Retained earnings, 12/31
$(150,000)
(10,000)
-0-
$ (440,000)
$(160,000)
$ 40,000
Cash ...
30,000
300,000
260,000
Accounts receivable..
Inventory..
Investment in Skyler Corporation.
Land, buildings, and equipment.
Accumulated depreciation
100,000
180,000
560,000
-0-
680,000
500,000
(180,000)
$ 1,650,000
$ (140,000)
(240,000)
-0-
(90,000)
$ 730,000
$ (90,000)
(180,000)
(100,000)
(200,000)
-0-
Total assets .
Accounts payable.
Long-term liabilities.
Preferred stock .
(620,000)
(210,000)
(440,000)
$(1,650,000)
Common stock
Additional paid-in capital.
Retained earnings, 12/31
(160,000)
$(730,000)
Total liabilities and equity
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