Problem 5-11 (Static) (LO 5-2, 5-3, 5-5, 5-7) 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: Items Revenues Cost of goods sold Expenses Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash and receivables Inventory Investment in Suarez Equipment (net) Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities Jarel $ (300,000) 140,000 20,000 $ (140,000) $ (300,000) (140,000) 0 $ (440,000) $ 210,000 150,000 260,000 440,000 $ 1,060,000 $ (420,000) (200,000) (440,000) $ (1,060,000) a. Revenues b. Cost of goods sold c. Expenses d. Noncontrolling interest appearing on the balance sheet e. Equipment (net) f. Inventory Suarez $ (200,000) 80,000 10,000 $ (110,000) $ (150,000) (110,000) 0 $ (260,000) $ 90,000 110,000 0 300,000 $ 500,000 $ (140,000) (100,000) (260,000) $ (500,000) Required: Included in the preceding statements,Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31. Compute the following amounts for the December 31 consolidated financial statements for Jarel and Suarez. Note: Input all amounts as positive value. Consolidated Amount
Problem 5-11 (Static) (LO 5-2, 5-3, 5-5, 5-7) 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: Items Revenues Cost of goods sold Expenses Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash and receivables Inventory Investment in Suarez Equipment (net) Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities Jarel $ (300,000) 140,000 20,000 $ (140,000) $ (300,000) (140,000) 0 $ (440,000) $ 210,000 150,000 260,000 440,000 $ 1,060,000 $ (420,000) (200,000) (440,000) $ (1,060,000) a. Revenues b. Cost of goods sold c. Expenses d. Noncontrolling interest appearing on the balance sheet e. Equipment (net) f. Inventory Suarez $ (200,000) 80,000 10,000 $ (110,000) $ (150,000) (110,000) 0 $ (260,000) $ 90,000 110,000 0 300,000 $ 500,000 $ (140,000) (100,000) (260,000) $ (500,000) Required: Included in the preceding statements,Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31. Compute the following amounts for the December 31 consolidated financial statements for Jarel and Suarez. Note: Input all amounts as positive value. Consolidated Amount
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 5-11 (Static) (LO 5-2, 5-3, 5-5, 5-7)
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:
Items
Revenues
Cost of goods sold
Expenses
Net income
Retained earnings, 1/1
Net income
Dividends declared
Retained earnings, 12/31
Cash and receivables
Inventory
Investment in Suarez
Equipment (net)
Total assets
Liabilities
Common stock
Retained earnings, 12/31
Total liabilities and equities
Jarel
$ (300,000)
140,000
20,000
$ (140,000)
$ (300,000)
(140,000)
0
$ (440,000)
$ 210,000
150,000
260,000
440,000
$ 1,060,000
$ (420,000)
(200,000)
(440,000)
$ (1,060,000)
a. Revenues
b. Cost of goods sold
c. Expenses
d. Noncontrolling interest appearing on the balance sheet
e. Equipment (net)
f. Inventory
Suarez
$ (200,000)
80,000
10,000
$ (110,000)
$ (150,000)
(110,000)
0
$ (260,000)
$ 90,000
110,000
0
300,000
$ 500,000
$ (140,000)
(100,000)
(260,000)
$ (500,000)
Required:
Included in the preceding statements,Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns
60 percent on December 31. Compute the following amounts for the December 31 consolidated financial statements for Jarel and
Suarez.
Note: Input all amounts as positive value.
Consolidated
Amount
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