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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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)