GEN COMBO FUNDAMENTALS OF ADVANCED ACCOUNTING; CONNECT ACCESS CARD
7th Edition
ISBN: 9781260088649
Author: Joe Ben Hoyle
Publisher: McGraw-Hill Education
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Question
Chapter 2, Problem 26P
To determine
Find the consolidated balances for the following accounts.
a. Net income
b.
c. Patented technology
d.
e. Liabilities
f. Common stock
g. Additional paid-in capital.
Expert Solution & Answer
Answer to Problem 26P
| Accounts | Consolidated value | |
| a. | Net income | $ 210,000 |
| b. | Retained earnings, 1/1/17 | $ 800,000 |
| c. | Patented technology | $ 1,180,000 |
| d. | Goodwill | $ 50,000 |
| e. | Liabilities | $ 1,210,000 |
| f. | Common stock | $ 510,000 |
| g. | Additional paid-in capital | $ 680,000 |
Table: (1)
Explanation of Solution
The consolidated balances are as follows:
| Accounts | Book values in Company P | Fair values in Company S | Consolidated value | |
| a. | Net income (1) | $ 210,000 | ||
| b. | Retained earnings, 1/1/17 | $ 800,000 | $ 800,000 | |
| c. | Patented technology | $ 900,000 | $ 280,000 | $ 1,180,000 |
| d. | Goodwill (2) | $ 50,000 | ||
| e. | Liabilities (3) | $ 500,000 | $ 410,000 | $ 1,210,000 |
| f. | Common stock (4) | $ 510,000 | ||
| g. | Additional paid-in capital (5) | $ 680,000 |
Table: (2)
Working note:
Computation of net income:
Computation of Goodwill:
| Particulars | Amount | Amount |
|
Consideration paid | $ 900,000 | |
| Cash | $ 110,000 | |
| Receivables | $ 170,000 | |
| Patented Technology (net) | $ 280,000 | |
| Equipment (net) | $ 700,000 | |
| Liabilities | $ (410,000) | |
| Fair value of net identifiable assets | $ 850,000 | |
| Goodwill | $ 80,000 (2) | |
Table: (3)
Computation of liabilities:
Computation of Common Stock:
Computation of Additional paid-in capital:
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Consolidation after Several Years
On January 1, 2016, Adams Corporation acquired all of the stock of Baker Company. The fair value of Adams’ shares used in the exchange was $37,500,000. At the time of acquisition, the book value of Baker’s shareholders’ equity was $5,000,000, and the book value of Baker’s building (25-year life) exceeded its fair value by $1,000,000. From the date of acquisition to December 31, 2021, Baker had cumulative net income of $1,300,000. For 2022, Baker reported net income of $300,000. Adams uses the complete equity method to account for its investment in Baker. There is no goodwill impairment loss for the period 2016 through 2021, but there is impairment loss of $100,000 in 2022. Baker declared no dividends during the period 2016–2022.
Required
Prepare the working paper eliminating entries necessary to consolidate the financial statements of Adams and Baker at December 31, 2022.
Enter numerical answers using all zeros (do not abbreviate in thousands or in…
Chapter 2 Solutions
GEN COMBO FUNDAMENTALS OF ADVANCED ACCOUNTING; CONNECT ACCESS CARD
Ch. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - Prob. 3QCh. 2 - Prob. 4QCh. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - Prob. 12PCh. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - Prob. 18PCh. 2 - Prob. 19PCh. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - 25. On May 1, Soriano Co. reported the following...Ch. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - Prob. 29PCh. 2 - Prob. 30PCh. 2 - Prob. 31PCh. 2 - Prob. 32PCh. 2 - Prob. 33PCh. 2 - Prob. 34PCh. 2 - Prob. 35APACh. 2 - Prob. 36APACh. 2 - Prob. 37APBCh. 2 - Prob. 38APBCh. 2 - Prob. 1DYSCh. 2 - Prob. 2DYSCh. 2 - Prob. 3DYSCh. 2 - Prob. 4DYS
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