The following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2021: Revenues Cost of goods sold Depreciation expense Investment income Dividends declared Retained earnings, 1/1/21 Current assets Copyrights Royalty agreements Investment in Stanza Liabilities Penske $ (700,000) 250,000 150,000 Not given 80,000 (600,000) 400,000 900,000 600,000 Not given (500,000) (600,000) ($20 par) (150,000) Common stock Additional paid-in capital Note: Parentheses indicate a credit balance. Stanza $ (400,000) 100,000 200,000 0 60,000 (200,000) 500,000 400,000 1,000,000 0 (1,380,000) (200,000) ($10 par) (80,000) On January 1, 2021, Penske acquired all of Stanza's outstanding stock for $680,000 fair value in cash and common stock paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $440,00 but a fair value of $560,000. a. As of December 31, 2021, what is the consolidated copyrights balance? b. For the year ending December 31, 2021, what is consolidated net income? c. As of December 31, 2021, what is the consolidated retained earnings balance? d. As of December 31, 2021, what is the consolidated balance to be reported for goodwill?

The following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2021: Revenues Cost of goods sold Depreciation expense Investment income Dividends declared Retained earnings, 1/1/21 Current assets Copyrights Royalty agreements Investment in Stanza Liabilities Penske $ (700,000) 250,000 150,000 Not given 80,000 (600,000) 400,000 900,000 600,000 Not given (500,000) (600,000) ($20 par) (150,000) Common stock Additional paid-in capital Note: Parentheses indicate a credit balance. Stanza $ (400,000) 100,000 200,000 0 60,000 (200,000) 500,000 400,000 1,000,000 0 (1,380,000) (200,000) ($10 par) (80,000) On January 1, 2021, Penske acquired all of Stanza's outstanding stock for $680,000 fair value in cash and common stock paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $440,00 but a fair value of $560,000. a. As of December 31, 2021, what is the consolidated copyrights balance? b. For the year ending December 31, 2021, what is consolidated net income? c. As of December 31, 2021, what is the consolidated retained earnings balance? d. As of December 31, 2021, what is the consolidated balance to be reported for goodwill?

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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Question

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The following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2021:
Revenues
Cost of goods sold
Depreciation expense
Investment income
Dividends declared
Retained earnings, 1/1/21
Current assets
Copyrights
Royalty agreements
Investment in Stanza
Liabilities
Penske
$ (700,000)
250,000
150,000
Not given
80,000
(600,000)
400,000
900,000
600,000
Not given
(500,000)
(600,000) ($20 par)
(150,000)
Common stock
Additional paid-in capital
Note: Parentheses indicate a credit balance.
$
Stanza
(400,000)
100,000
200,000
0
60,000
(200,000)
500,000
400,000
1,000,000
0
(1,380,000)
(200,000) ($10 par)
(80,000)
On January 1, 2021, Penske acquired all of Stanza's outstanding stock for $680,000 fair value in cash and common stock. Penske also
paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $440,000 book value
but a fair value of $560,000.
a. As of December 31, 2021, what is the consolidated copyrights balance?
b. For the year ending December 31, 2021, what is consolidated net income?
c. As of December 31, 2021, what is the consolidated retained earnings balance?
d. As of December 31, 2021, what is the consolidated balance to be reported for goodwill?

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