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Required: Prepare a 2021 consolidated Income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company, elects to amortize goodwill over a 10-year period.

Required: Prepare a 2021 consolidated Income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company, elects to amortize goodwill over a 10-year period.

FINANCIAL ACCOUNTING
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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Angela Corporation (a private company) acquired all of the outstanding voting stock of Eddy Tech, Inc., on January 1, 2021, In exchange for $9,000,000 in cash. At the acquisition date, Eddy Tech's stockholders' equity was $7,200,000 Including retained earnings of $3,000,000. At the acquisition date, Angela prepared the following fair value allocation schedule for its newly acquired subsidiary: Consideration transferred Eddy's stockholder's equity Excess fair over book value to patented technology (5-year remaining life) to trade names (indefinite remaining life) to equipment (8-year remaining life) Goodwill $ 150,000 500,000 50,000 Sales Cost of goods sold Depreciation expense Amortization expense Other operating expenses Net income $ 9,000,000 7,200,000 $ 1,800,000 At the end of 2021, Angela and Eddy Tech report the following amounts from their individually maintained account balances, before consideration of their parent-subsidiary relationship. Parentheses Indicate a credit balance. Angela Eddy Tech $ (7,850,000) $ (2,400,000) 4,200,000 1,300,000 425,000 48,000 250,000 12,000 75,000 53,750 $ (2,900,000) $ (986,250) 700,000 $ 1,100,000 Required: Prepare a 2021 consolidated Income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company, elects to amortize goodwill over a 10-year period.
Transcribed Image Text:Angela Corporation (a private company) acquired all of the outstanding voting stock of Eddy Tech, Inc., on January 1, 2021, In exchange for $9,000,000 in cash. At the acquisition date, Eddy Tech's stockholders' equity was $7,200,000 Including retained earnings of $3,000,000. At the acquisition date, Angela prepared the following fair value allocation schedule for its newly acquired subsidiary: Consideration transferred Eddy's stockholder's equity Excess fair over book value to patented technology (5-year remaining life) to trade names (indefinite remaining life) to equipment (8-year remaining life) Goodwill $ 150,000 500,000 50,000 Sales Cost of goods sold Depreciation expense Amortization expense Other operating expenses Net income $ 9,000,000 7,200,000 $ 1,800,000 At the end of 2021, Angela and Eddy Tech report the following amounts from their individually maintained account balances, before consideration of their parent-subsidiary relationship. Parentheses Indicate a credit balance. Angela Eddy Tech $ (7,850,000) $ (2,400,000) 4,200,000 1,300,000 425,000 48,000 250,000 12,000 75,000 53,750 $ (2,900,000) $ (986,250) 700,000 $ 1,100,000 Required: Prepare a 2021 consolidated Income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company, elects to amortize goodwill over a 10-year period.
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