Paro Solar Statement Accounts Company Company Income Statement: Net Sales .... (520,000) 300,000 120,000 (72,000) (450,000) 260,000 100,000 Cost of Goods Sold Operating Expenses Subsidiary Income Noncontrolling Interest in Income Net Income... (172,000) (90,000) Retained Earnings Statement: Balance, January 1, 2016–Paro Company... Balance, January 1, 2016–Solar Company Net Income (from above)...... Dividends Declared Paro Company Dividends Declared Solar Company (214,000) (190,000) (90,000) (172,000) 50,000 30,000 (250,000) Balance, December 31, 2016.... (336,000) Consolidated Balance Sheet: Inventory, December 31, 2016. Other Current Assets ... Investment in Solar Company Land.... 100,000 50,000 136,000 180,000 400,000 50,000 50,000 Paro Solar Statement Accounts Company Company Building and Equipment. Accumulated Depreciation Goodwill ...... Other Intangibles . Current Liabilities . Bonds Payable.. Other Long-Term liabilities. Common Stock Paro Company. Other Paid-In Capitalin Excess of Par-Paro Company . Common Stock-Solar Company . Other Paid-In Capitalin Excess of Par-Solar Company.. Retained Earnings, December 31, 2016 (from above) . 350,000 (100,000) 320,000 (60,000) 20,000 (120,000) (40,000) (100,000) (200,000) (200,000) (100,000) (50,000) (100,000) (250,000) (336,000) ... Totals .

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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Question

On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000.
On this date, Solar has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Solar Company are as follows:
2015 2016
Net income . . . . . . . . . . . . . . . . . . . . . . $60,000 $90,000
Dividends. . . . . . . . . . . . . . . . . . . . . . . . 20,000 30,000
On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of 10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributable to goodwill.
1. Using this information or the information in the following statements for the year ended December 31, 2016, prepare a determination and distribution of excess schedule.
2. Complete the vertical worksheet for consolidated financial statements for 2016.

Paro
Solar
Statement Accounts
Company
Company
Income Statement:
Net Sales ....
(520,000)
300,000
120,000
(72,000)
(450,000)
260,000
100,000
Cost of Goods Sold
Operating Expenses
Subsidiary Income
Noncontrolling Interest in Income
Net Income...
(172,000)
(90,000)
Retained Earnings Statement:
Balance, January 1, 2016–Paro Company...
Balance, January 1, 2016–Solar Company
Net Income (from above)......
Dividends Declared Paro Company
Dividends Declared Solar Company
(214,000)
(190,000)
(90,000)
(172,000)
50,000
30,000
(250,000)
Balance, December 31, 2016....
(336,000)
Consolidated Balance Sheet:
Inventory, December 31, 2016.
Other Current Assets ...
Investment in Solar Company
Land....
100,000
50,000
136,000
180,000
400,000
50,000
50,000

Paro
Solar
Statement Accounts
Company
Company
Building and Equipment.
Accumulated Depreciation
Goodwill ......
Other Intangibles .
Current Liabilities .
Bonds Payable..
Other Long-Term liabilities.
Common Stock Paro Company.
Other Paid-In Capitalin Excess of Par-Paro Company .
Common Stock-Solar Company .
Other Paid-In Capitalin Excess of Par-Solar Company..
Retained Earnings, December 31, 2016 (from above) .
350,000
(100,000)
320,000
(60,000)
20,000
(120,000)
(40,000)
(100,000)
(200,000)
(200,000)
(100,000)
(50,000)
(100,000)
(250,000)
(336,000)
...
Totals .

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