Compute consolidated balances for Company I and Company C.

Question

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Answer 1

Question

Chapter 3, Problem 4DYS

a.

To determine

Compute consolidated balances for Company I and Company C.

a.

Expert Solution

Explanation of Solution

Consolidated balances for Company I and Company C:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (375,000)	$ (97,000)			$ (412,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 670,000	$ -	*C 60,000	S 580,000
				A 150,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -	A 50,000		$ 500,000
Total assets	$ 3,080,000	$ 725,000			$ 3,265,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,680,000)	$ (507,000)			$ (1,777,000)
Total liabilities and equity	$ (3,080,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,265,000)

Table: (1)

Working note:

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (375,000)	$ (97,000)			$ (412,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,680,000)	$ (507,000)			$ (1,777,000)

Table: (2)

b.

To determine

Prepare a second spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition.

b.

Expert Solution

Explanation of Solution

Spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Impairment loss	$ 50,000				50000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (325,000)	$ (97,000)			$ (362,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 620,000	$ -	*C 60,000	S 580,000
				A 100,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -			$ 450,000
Total assets	$ 3,030,000	$ 725,000			$ 3,215,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,630,000)	$ (507,000)			$ (1,727,000)
Total liabilities and equity	$ (3,030,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,215,000)

Table: (3)

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (325,000)	$ (97,000)			$ (362,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,630,000)	$ (507,000)			$ (1,727,000)

Table: (4)

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I am trying to find the accurate solution to this financial accounting problem with the correct explanation.

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Indira Products has provided the following data for the month of August: a. The balance in the Finished Goods inventory account at the beginning of the month was $65,000 and at the end of the month was $29,500. b. The cost of goods manufactured for the month was $210,000. c. The actual manufacturing overhead cost incurred was $71,800 and the manufacturing overhead cost applied to Work in Process was $75,200. d. The company closes out any underapplied or overapplied manufacturing overhead to the cost of goods sold. What is the adjusted cost of goods sold that would appear on the income statement for August?

Answer 2

Question

Chapter 3, Problem 4DYS

a.

To determine

Compute consolidated balances for Company I and Company C.

a.

Expert Solution

Explanation of Solution

Consolidated balances for Company I and Company C:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (375,000)	$ (97,000)			$ (412,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 670,000	$ -	*C 60,000	S 580,000
				A 150,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -	A 50,000		$ 500,000
Total assets	$ 3,080,000	$ 725,000			$ 3,265,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,680,000)	$ (507,000)			$ (1,777,000)
Total liabilities and equity	$ (3,080,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,265,000)

Table: (1)

Working note:

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (375,000)	$ (97,000)			$ (412,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,680,000)	$ (507,000)			$ (1,777,000)

Table: (2)

b.

To determine

Prepare a second spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition.

b.

Expert Solution

Explanation of Solution

Spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Impairment loss	$ 50,000				50000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (325,000)	$ (97,000)			$ (362,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 620,000	$ -	*C 60,000	S 580,000
				A 100,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -			$ 450,000
Total assets	$ 3,030,000	$ 725,000			$ 3,215,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,630,000)	$ (507,000)			$ (1,727,000)
Total liabilities and equity	$ (3,030,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,215,000)

Table: (3)

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (325,000)	$ (97,000)			$ (362,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,630,000)	$ (507,000)			$ (1,727,000)

Table: (4)

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Answer 3

Question

Chapter 3, Problem 4DYS

a.

To determine

Compute consolidated balances for Company I and Company C.

a.

Expert Solution

Explanation of Solution

Consolidated balances for Company I and Company C:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (375,000)	$ (97,000)			$ (412,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 670,000	$ -	*C 60,000	S 580,000
				A 150,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -	A 50,000		$ 500,000
Total assets	$ 3,080,000	$ 725,000			$ 3,265,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,680,000)	$ (507,000)			$ (1,777,000)
Total liabilities and equity	$ (3,080,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,265,000)

Table: (1)

Working note:

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (375,000)	$ (97,000)			$ (412,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,680,000)	$ (507,000)			$ (1,777,000)

Table: (2)

b.

To determine

Prepare a second spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition.

b.

Expert Solution

Explanation of Solution

Spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Impairment loss	$ 50,000				50000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (325,000)	$ (97,000)			$ (362,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 620,000	$ -	*C 60,000	S 580,000
				A 100,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -			$ 450,000
Total assets	$ 3,030,000	$ 725,000			$ 3,215,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,630,000)	$ (507,000)			$ (1,727,000)
Total liabilities and equity	$ (3,030,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,215,000)

Table: (3)

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (325,000)	$ (97,000)			$ (362,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,630,000)	$ (507,000)			$ (1,727,000)

Table: (4)

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Answer 4

Question

Chapter 3, Problem 4DYS

a.

To determine

Compute consolidated balances for Company I and Company C.

a.

Expert Solution

Explanation of Solution

Consolidated balances for Company I and Company C:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (375,000)	$ (97,000)			$ (412,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 670,000	$ -	*C 60,000	S 580,000
				A 150,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -	A 50,000		$ 500,000
Total assets	$ 3,080,000	$ 725,000			$ 3,265,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,680,000)	$ (507,000)			$ (1,777,000)
Total liabilities and equity	$ (3,080,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,265,000)

Table: (1)

Working note:

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (375,000)	$ (97,000)			$ (412,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,680,000)	$ (507,000)			$ (1,777,000)

Table: (2)

b.

To determine

Prepare a second spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition.

b.

Expert Solution

Explanation of Solution

Spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Impairment loss	$ 50,000				50000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (325,000)	$ (97,000)			$ (362,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 620,000	$ -	*C 60,000	S 580,000
				A 100,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -			$ 450,000
Total assets	$ 3,030,000	$ 725,000			$ 3,215,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,630,000)	$ (507,000)			$ (1,727,000)
Total liabilities and equity	$ (3,030,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,215,000)

Table: (3)

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (325,000)	$ (97,000)			$ (362,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,630,000)	$ (507,000)			$ (1,727,000)

Table: (4)

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Answer 5

Chapter 3, Problem 4DYS

a.

To determine

Compute consolidated balances for Company I and Company C.

a.

Expert Solution

Explanation of Solution

Consolidated balances for Company I and Company C:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (375,000)	$ (97,000)			$ (412,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 670,000	$ -	*C 60,000	S 580,000
				A 150,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -	A 50,000		$ 500,000
Total assets	$ 3,080,000	$ 725,000			$ 3,265,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,680,000)	$ (507,000)			$ (1,777,000)
Total liabilities and equity	$ (3,080,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,265,000)

Table: (1)

Working note:

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (375,000)	$ (97,000)			$ (412,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,680,000)	$ (507,000)			$ (1,777,000)

Table: (2)

b.

To determine

Prepare a second spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition.

b.

Expert Solution

Explanation of Solution

Spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Impairment loss	$ 50,000				50000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (325,000)	$ (97,000)			$ (362,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 620,000	$ -	*C 60,000	S 580,000
				A 100,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -			$ 450,000
Total assets	$ 3,030,000	$ 725,000			$ 3,215,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,630,000)	$ (507,000)			$ (1,727,000)
Total liabilities and equity	$ (3,030,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,215,000)

Table: (3)

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (325,000)	$ (97,000)			$ (362,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,630,000)	$ (507,000)			$ (1,727,000)

Table: (4)

Answer 6

Chapter 3, Problem 4DYS

a.

To determine

Compute consolidated balances for Company I and Company C.

a.

Expert Solution

Explanation of Solution

Consolidated balances for Company I and Company C:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (375,000)	$ (97,000)			$ (412,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 670,000	$ -	*C 60,000	S 580,000
				A 150,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -	A 50,000		$ 500,000
Total assets	$ 3,080,000	$ 725,000			$ 3,265,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,680,000)	$ (507,000)			$ (1,777,000)
Total liabilities and equity	$ (3,080,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,265,000)

Table: (1)

Working note:

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (375,000)	$ (97,000)			$ (412,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,680,000)	$ (507,000)			$ (1,777,000)

Table: (2)

Answer 7

Chapter 3, Problem 4DYS

a.

To determine

Compute consolidated balances for Company I and Company C.

Answer 8

a.

Expert Solution

Explanation of Solution

Consolidated balances for Company I and Company C:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (375,000)	$ (97,000)			$ (412,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 670,000	$ -	*C 60,000	S 580,000
				A 150,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -	A 50,000		$ 500,000
Total assets	$ 3,080,000	$ 725,000			$ 3,265,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,680,000)	$ (507,000)			$ (1,777,000)
Total liabilities and equity	$ (3,080,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,265,000)

Table: (1)

Working note:

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (375,000)	$ (97,000)			$ (412,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,680,000)	$ (507,000)			$ (1,777,000)

Table: (2)

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

To determine

Prepare a second spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition.

b.

Expert Solution

Explanation of Solution

Spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Impairment loss	$ 50,000				50000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (325,000)	$ (97,000)			$ (362,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 620,000	$ -	*C 60,000	S 580,000
				A 100,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -			$ 450,000
Total assets	$ 3,030,000	$ 725,000			$ 3,215,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,630,000)	$ (507,000)			$ (1,727,000)
Total liabilities and equity	$ (3,030,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,215,000)

Table: (3)

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (325,000)	$ (97,000)			$ (362,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,630,000)	$ (507,000)			$ (1,727,000)

Table: (4)

Answer 13

b.

To determine

Prepare a second spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition.

Answer 14

b.

Expert Solution

Explanation of Solution

Spreadsheet that shows a 2018 impairment loss for the entire amount of goodwill from Company C acquisition:

Income statement	Company I	Company C	Debit	Credit	Consolidated Balances
Revenues	$ (990,000)	$ (210,000)			$ (1,200,000)
Cost of goods sold	$ 500,000	$ 90,000			$ 590,000
Depreciation expense	$ 100,000	$ 5,000			$ 105,000
Amortization expense	$ 55,000	$ 18,000	E 20,000		$ 93,000
Impairment loss	$ 50,000				50000
Equity earnings from Company C	$ (40,000)		I 40,000		$ -
Net income	$ (325,000)	$ (97,000)			$ (362,000)

Balance Sheet
Current assets	$ 960,000	$ 355,000			$ 1,315,000
Investment in Company C	$ 620,000	$ -	*C 60,000	S 580,000
				A 100,000	$ -
Equipment	$ 765,000	$ 225,000			$ 990,000
Trademark	$ 235,000	$ 100,000	A 36,000	E 4,000	$ 367,000
Existing technology		$ 45,000	A 64,000	E 16,000	$ 93,000
Goodwill	$ 450,000	$ -			$ 450,000
Total assets	$ 3,030,000	$ 725,000			$ 3,215,000

Liabilities	$ (780,000)	$ (88,000)			$ (868,000)
Common stock	$ (500,000)	$ (100,000)	S 100,000		$ (500,000)
Additional paid-in capital	$ (120,000)	$ (30,000)	S 30,000		$ (120,000)
Retained earnings	$ (1,630,000)	$ (507,000)			$ (1,727,000)
Total liabilities and equity	$ (3,030,000)	$ (725,000)	$ 850,000	$ 850,000	$ (3,215,000)

Table: (3)

Statement of retained earnings	Company I	Company C	Debit	Credit	Consolidated Balances
Retained earnings on 01/01	$ (1,555,000)	$ (450,000)	S 450,000	*C 60,000	$ (1,615,000)
Net Income	$ (325,000)	$ (97,000)			$ (362,000)
Dividends declared	$ 250,000	$ 40,000		I 40,000	$ 250,000
Retained earnings on 31/12	$ (1,630,000)	$ (507,000)			$ (1,727,000)