Exercise – 1Prepare a consolidated balance sheet at acquisition and compute consolidated netincome one year laterOn December 31, 2011, The Ocean Corporation purchased 80 percent of the stock ofArabian Sea Company at book value. The data reported on their separate balance sheetsimmediately after the acquisition follow. At December 31, 2011, The Ocean Corporationowes Arabian Sea $10,000 on accounts payable (All amounts are in thousands).TheArabianOceanSeaAssetsCashAccounts receivable64369068Inventories286112Investment in Arabian Sea400Equipment-net7603501,600566Liabilities and Stockholders'EquityAccounts payableCommon stock, $10 parRetained earnings80669203006002001,600566REQUIRED1. Prepare a consolidated balance sheet for The Ocean Corporation and Subsidiary atDecember 31, 2011.2. Compute consolidated net income for 2012 assuming that The Ocean Corporationreported separate income of $340,000 and Arabian Sea Company reported netincome of $180,000. (Separate incomes does not include income from theinvestment in Arabian Sea.)

CONSOLIDATED BALANCE SHEET Ocean Sea Adjustment Consolidated Assets : Cash 64 36…

Prepare a consolidated balance sheet at acquisition and compute consolidated net income one year later On December 31, 2011, The Ocean Corporation purchased 80 percent of the stock of Arabian Sea Company at book value. The data reported on their separate balance sheets immediately after the acquisition follow. At December 31, 2011, The Ocean Corporation owes Arabian Sea $10,000 on accounts payable (All amounts are in thousands).

Prepare a consolidated balance sheet at acquisition and compute consolidated net income one year later On December 31, 2011, The Ocean Corporation purchased 80 percent of the stock of Arabian Sea Company at book value. The data reported on their separate balance sheets immediately after the acquisition follow. At December 31, 2011, The Ocean Corporation owes Arabian Sea $10,000 on accounts payable (All amounts are in thousands).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Exercise – 1
Prepare a consolidated balance sheet at acquisition and compute consolidated net
income one year later
On December 31, 2011, The Ocean Corporation purchased 80 percent of the stock of
Arabian Sea Company at book value. The data reported on their separate balance sheets
immediately after the acquisition follow. At December 31, 2011, The Ocean Corporation
owes Arabian Sea $10,000 on accounts payable (All amounts are in thousands).
The
Arabian
Ocean
Sea
Assets
Cash
Accounts receivable
64
36
90
68
Inventories
286
112
Investment in Arabian Sea
400
Equipment-net
760
350
1,600
566
Liabilities and Stockholders'
Equity
Accounts payable
Common stock, $10 par
Retained earnings
80
66
920
300
600
200
1,600
566
REQUIRED
1. Prepare a consolidated balance sheet for The Ocean Corporation and Subsidiary at
December 31, 2011.
2. Compute consolidated net income for 2012 assuming that The Ocean Corporation
reported separate income of $340,000 and Arabian Sea Company reported net
income of $180,000. (Separate incomes does not include income from the
investment in Arabian Sea.)

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