On January 1, 20x1, ABC Corporation purchased all of XYZ Corporation's common stock for $1,200,000. On that date, the fair values of XYZ's assets and liabilities equaled their carrying amounts of $1,320,000 and $320,000, respectively. During year 1, XYZ paid cash dividends of $20,000. Selected information from the separate balance sheets and income statements of ABC and XYZ as of December 31, year 1, and for the year then ended follows: ABC Corporation (Column 1), XYZ Corporation (Column 2) REQUIRED: In ABC's December 31, year 1 consolidated balance sheet, what amount should be reported as total retained earnings?
On January 1, 20x1, ABC Corporation purchased all of XYZ Corporation's common stock for $1,200,000. On that date, the fair values of XYZ's assets and liabilities equaled their carrying amounts of $1,320,000 and $320,000, respectively. During year 1, XYZ paid cash dividends of $20,000. Selected information from the separate balance sheets and income statements of ABC and XYZ as of December 31, year 1, and for the year then ended follows: ABC Corporation (Column 1), XYZ Corporation (Column 2) REQUIRED: In ABC's December 31, year 1 consolidated balance sheet, what amount should be reported as total retained earnings?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 20x1, ABC Corporation purchased all of XYZ Corporation's common stock for $1,200,000. On that date, the fair values of XYZ's assets and liabilities equaled their carrying amounts of $1,320,000 and $320,000, respectively. During year 1, XYZ paid cash dividends of $20,000. Selected information from the separate balance sheets and income statements of ABC and XYZ as of December 31, year 1, and for the year then ended follows: ABC Corporation (Column 1), XYZ Corporation (Column 2)
REQUIRED:
In ABC's December 31, year 1 consolidated
Transcribed Image Text:Balance sheet accounts
Investment in subsidiary
Retained earnings
Total stockholders' equity
$1,320,000
1,240,000
2,620,000
560,000
1,120,000
Income statement accounts
Operating income
Equity in earnings of Sharp
420,000
140,000
400,000
200,000
Net income
140.000
In Owen's December 31, year 1 consolidated balance
sheet, what amount should be reported as total retained
earnings?
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