Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $941, 800 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,177,250. Also at the acquisition date, Stanford's book value was $546, 100. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 300, 900 $ 360, 900 Property and equipment (net, 8-year remaining life) 233, 600 262, 400 Patent (14-year remaining life) 120, 900 154, 500 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (795, 100) $ (782,600) Cost of goods sold 439, 600 331, 000 Depreciation expense 186, 400 29, 200 Amortization expense 0 23, 400 Equity in income of Stanford (314, 400) 0 Net income $ (483,500) $ (399,000) Retained earnings, 1/1/24 $ (1,066, 500) $ (443,000) Net income (483, 500) (399, 000) Dividends declared 250, 900 36,000 Retained earnings, 12/31/24 $ (1, 299, 100) $ (806,000) Current assets $ 719,400 $ 361,300 Investment in Stanford 1,227, 400 0 Trade names 200,800 300, 900 Property and equipment (net) 861, 800 204, 400 Patents 0 97,500 Total assets $ 3,009, 400 $ 964, 100 Accounts payable $ (118,800) $ (55,000) Common stock (250, 900) (90,000) Additional paid-in capital (1,340, 600) (13, 100) Retained earnings (above ) (1, 299, 100) (806, 000) Total liabilities and equities $ (3,009, 400) $ (964, 100) At year-end, there were no intra-entity receivables or payables, Required: Prepare a worksheet to consolidate the financial statements of Plaza, Incorporated, and its subsidiary Stanford.
Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $941, 800 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,177,250. Also at the acquisition date, Stanford's book value was $546, 100. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 300, 900 $ 360, 900 Property and equipment (net, 8-year remaining life) 233, 600 262, 400 Patent (14-year remaining life) 120, 900 154, 500 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (795, 100) $ (782,600) Cost of goods sold 439, 600 331, 000
Step by step
Solved in 3 steps
