Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $206,000 in cash. Jasmine had a book value of only $140,000 on that date. However, equipment (having an eight-year remaining life) was undervalued by $54,400 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $10,000. Subsequent to the acquisition, Jasmine reported the following: Net Income Dividends Declared 2016 $ 50,000 $ 10,000 2017 60,000 40,000 2018 30,000 20,000 In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow: Tyler Company Jasmine Company Revenues—operating $ (310,000 ) $ (104,000 ) Expenses 198,000 74,000 Equipment (net) 320,000 50,000 Buildings (net) 220,000 68,000 Common stock (290,000 ) (50,000 ) Retained earnings, 12/31/18 (410,000 ) (160,000 ) Determine the following account balances as of December 31, 2018: a.Investment in Jasmine Company b.Equity in Subsidiary Earnings c.Consolidated Net Income d.Consolidated Equipment (net) e.Consolidated Buildings (net) f.Consolidated Goodwill (net) g.Consolidated Common Stock h.Consolidated Retained Earnings, 12/31/18
Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $206,000 in cash. Jasmine had a book value of only $140,000 on that date. However, equipment (having an eight-year remaining life) was undervalued by $54,400 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $10,000. Subsequent to the acquisition, Jasmine reported the following: Net Income Dividends Declared 2016 $ 50,000 $ 10,000 2017 60,000 40,000 2018 30,000 20,000 In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow: Tyler Company Jasmine Company Revenues—operating $ (310,000 ) $ (104,000 ) Expenses 198,000 74,000 Equipment (net) 320,000 50,000 Buildings (net) 220,000 68,000 Common stock (290,000 ) (50,000 ) Retained earnings, 12/31/18 (410,000 ) (160,000 ) Determine the following account balances as of December 31, 2018: a.Investment in Jasmine Company b.Equity in Subsidiary Earnings c.Consolidated Net Income d.Consolidated Equipment (net) e.Consolidated Buildings (net) f.Consolidated Goodwill (net) g.Consolidated Common Stock h.Consolidated Retained Earnings, 12/31/18
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $206,000 in cash. Jasmine had a book value of only $140,000 on that date. However, equipment (having an eight-year remaining life) was undervalued by $54,400 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $10,000. Subsequent to the acquisition, Jasmine reported the following:
| Net Income | Dividends Declared | |||||
| 2016 | $ | 50,000 | $ | 10,000 | ||
| 2017 | 60,000 | 40,000 | ||||
| 2018 | 30,000 | 20,000 | ||||
In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow:
| Tyler Company | Jasmine Company | ||||||
| Revenues—operating | $ | (310,000 | ) | $ | (104,000 | ) | |
| Expenses | 198,000 | 74,000 | |||||
| Equipment (net) | 320,000 | 50,000 | |||||
| Buildings (net) | 220,000 | 68,000 | |||||
| Common stock | (290,000 | ) | (50,000 | ) | |||
| (410,000 | ) | (160,000 | ) | ||||
Determine the following account balances as of December 31, 2018:
a.Investment in Jasmine Company
b.Equity in Subsidiary Earnings
c.Consolidated Net Income
d.Consolidated Equipment (net)
e.Consolidated Buildings (net)
f.Consolidated
g.Consolidated Common Stock
h.Consolidated Retained Earnings, 12/31/18
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