Show how Company P computed its $39,000 equity in Company S’s earnings balance.

Question

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Answer 1

Question

Chapter 5, Problem 36P

a.

To determine

Show how Company P computed its $39,000 equity in Company S’s earnings balance.

a.

Expert Solution

Explanation of Solution

Computation of equity in Company S’s earnings balance:

Particulars	Amount
Net income of the subsidiary	$(90,000)
Amortization of patented technology	$ 29,000
Unrealized gross profit of 2017 realized	$(13,000)
Unrealized gross profit of 2018 deferred	$ 19,000
Gain on sale of land deferred	$ 16,000
Equity in earnings	$(39,000)

Table: (1)

Working note:

Computation of closing stock in 2017:

Particulars	Amount
Sales price in 2017	$ 125,000
Resold %	74%
Unsold %	26.00%
Closing stock in 2017	$ 32,500

Table: (2)

Computation of unrealized profit on closing stock:

Year	Sales (A)	Cost of goods sold (B)	Profit C= (A) −(B)	Closing stock (D)	Profit on closing stock (E)={(C ×D) ÷A}
2017	$ 125,000	$ 75,000	$ 50,000	$ 32,500	$ 13,000
2018	$ 140,000	$ 70,000	$ 70,000	$ 38,000	$ 19,000

Table: (3)

b.

To determine

Prepare a 2018 consolidated worksheet for Company P and Company S.

b.

Expert Solution

Explanation of Solution

Consolidated worksheet for Company P and Company S in 2018:

Company P and Company S
Consolidation Worksheet
Year ending December 31, 2018
			Consolidation entries
Accounts	Company P	Company S	Debit	Credit	Consolidated totals
Revenues	$ (710,000)	$ (360,000)	$ 140,000		$ (930,000)
Cost of goods sold	$ 305,000	$ 189,000	$ 19,000	$ 140,000
				$ 13,000	$ 360,000
Other operating expenses	$ 167,000	$ 81,000	$ 29,000		$ 277,000
Gain on sale of land	$ (16,000)	$ -	$ 16,000		$ -
Equity in Company S's earnings	$ (39,000)	$ -	$ 39,000		$ -
Net income	$ (293,000)	$ (90,000)			$ (293,000)

Balance Sheet
Cash and receivables	$ 102,000	$ 154,000		$ 62,000	$ 194,000
Inventory	$ 311,000	$ 110,000		$ 19,000	$ 402,000
Investment in Company S	$ 691,000	$ -	$ 25,000	$ 429,000
				$ 248,000
				$ 39,000
Trademarks	$ -	$ 58,000	$ 45,000		$ 103,000
Land, buildings, and equip. (net)	$ 638,000	$ 280,000		$ 16,000	$ 902,000
Patented technology	$ -	$ 125,000	$ 203,000	$ 29,000	$ 299,000
Total assets	$ 1,742,000	$ 727,000			$ 1,900,000

Liabilities	$ (462,000)	$ (220,000)	$ 62,000		$ (620,000)
Common stock	$ (400,000)	$ (100,000)			$ (400,000)
Additional paid-in capital	$ (300,000)	$ (50,000)			$ (300,000)
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)
Total liabilities and equity	$(1,742,000)	$ (727,000)			$ (1,900,000)

Table: (4)

Working note:

Statement of retained earnings	Company P	Company S	Debit	Credit	Consolidated totals
Retained earnings 1/1/18	$ (367,000)	$ (292,000)	$ 13,000		$ (367,000)
			$ 279,000
Net income	$ (293,000)	$ (90,000)			$ (293,000)
Dividends declared	$ 80,000	$ 25,000		$ 25,000	$ 80,000
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)

Table: (5)

Computation of unamortized amount of patented technology:

Value of Unamortized patented technology as on 31/12/2017
Original value as on 01/01/2017	$ 232,000
Less: Amortization during the year	$ 29,000
Unamortized value as on 31/12/2017	$ 203,000

Table: (6)

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Financial accounting question

From the balance sheets 12/31/2024 Accounts receivable Prepaid insurance Machines Acc. depreciation 12/31/2023 From the income statement 12/31/2024 $90,000 8,000 $80,000 12,000 Sales $750,000 Cost of sales -600,000 65,000 95,000 Operating Expenses -75,000 -30,000 -20,000 Gain on sale of machine 4,000 Additional information: Operating expenses includes depreciation expense Machines costing $30,000 were sold for $22,000 at a gain.

Answer 2

Question

Chapter 5, Problem 36P

a.

To determine

Show how Company P computed its $39,000 equity in Company S’s earnings balance.

a.

Expert Solution

Explanation of Solution

Computation of equity in Company S’s earnings balance:

Particulars	Amount
Net income of the subsidiary	$(90,000)
Amortization of patented technology	$ 29,000
Unrealized gross profit of 2017 realized	$(13,000)
Unrealized gross profit of 2018 deferred	$ 19,000
Gain on sale of land deferred	$ 16,000
Equity in earnings	$(39,000)

Table: (1)

Working note:

Computation of closing stock in 2017:

Particulars	Amount
Sales price in 2017	$ 125,000
Resold %	74%
Unsold %	26.00%
Closing stock in 2017	$ 32,500

Table: (2)

Computation of unrealized profit on closing stock:

Year	Sales (A)	Cost of goods sold (B)	Profit C= (A) −(B)	Closing stock (D)	Profit on closing stock (E)={(C ×D) ÷A}
2017	$ 125,000	$ 75,000	$ 50,000	$ 32,500	$ 13,000
2018	$ 140,000	$ 70,000	$ 70,000	$ 38,000	$ 19,000

Table: (3)

b.

To determine

Prepare a 2018 consolidated worksheet for Company P and Company S.

b.

Expert Solution

Explanation of Solution

Consolidated worksheet for Company P and Company S in 2018:

Company P and Company S
Consolidation Worksheet
Year ending December 31, 2018
			Consolidation entries
Accounts	Company P	Company S	Debit	Credit	Consolidated totals
Revenues	$ (710,000)	$ (360,000)	$ 140,000		$ (930,000)
Cost of goods sold	$ 305,000	$ 189,000	$ 19,000	$ 140,000
				$ 13,000	$ 360,000
Other operating expenses	$ 167,000	$ 81,000	$ 29,000		$ 277,000
Gain on sale of land	$ (16,000)	$ -	$ 16,000		$ -
Equity in Company S's earnings	$ (39,000)	$ -	$ 39,000		$ -
Net income	$ (293,000)	$ (90,000)			$ (293,000)

Balance Sheet
Cash and receivables	$ 102,000	$ 154,000		$ 62,000	$ 194,000
Inventory	$ 311,000	$ 110,000		$ 19,000	$ 402,000
Investment in Company S	$ 691,000	$ -	$ 25,000	$ 429,000
				$ 248,000
				$ 39,000
Trademarks	$ -	$ 58,000	$ 45,000		$ 103,000
Land, buildings, and equip. (net)	$ 638,000	$ 280,000		$ 16,000	$ 902,000
Patented technology	$ -	$ 125,000	$ 203,000	$ 29,000	$ 299,000
Total assets	$ 1,742,000	$ 727,000			$ 1,900,000

Liabilities	$ (462,000)	$ (220,000)	$ 62,000		$ (620,000)
Common stock	$ (400,000)	$ (100,000)			$ (400,000)
Additional paid-in capital	$ (300,000)	$ (50,000)			$ (300,000)
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)
Total liabilities and equity	$(1,742,000)	$ (727,000)			$ (1,900,000)

Table: (4)

Working note:

Statement of retained earnings	Company P	Company S	Debit	Credit	Consolidated totals
Retained earnings 1/1/18	$ (367,000)	$ (292,000)	$ 13,000		$ (367,000)
			$ 279,000
Net income	$ (293,000)	$ (90,000)			$ (293,000)
Dividends declared	$ 80,000	$ 25,000		$ 25,000	$ 80,000
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)

Table: (5)

Computation of unamortized amount of patented technology:

Value of Unamortized patented technology as on 31/12/2017
Original value as on 01/01/2017	$ 232,000
Less: Amortization during the year	$ 29,000
Unamortized value as on 31/12/2017	$ 203,000

Table: (6)

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Answer 3

Question

Chapter 5, Problem 36P

a.

To determine

Show how Company P computed its $39,000 equity in Company S’s earnings balance.

a.

Expert Solution

Explanation of Solution

Computation of equity in Company S’s earnings balance:

Particulars	Amount
Net income of the subsidiary	$(90,000)
Amortization of patented technology	$ 29,000
Unrealized gross profit of 2017 realized	$(13,000)
Unrealized gross profit of 2018 deferred	$ 19,000
Gain on sale of land deferred	$ 16,000
Equity in earnings	$(39,000)

Table: (1)

Working note:

Computation of closing stock in 2017:

Particulars	Amount
Sales price in 2017	$ 125,000
Resold %	74%
Unsold %	26.00%
Closing stock in 2017	$ 32,500

Table: (2)

Computation of unrealized profit on closing stock:

Year	Sales (A)	Cost of goods sold (B)	Profit C= (A) −(B)	Closing stock (D)	Profit on closing stock (E)={(C ×D) ÷A}
2017	$ 125,000	$ 75,000	$ 50,000	$ 32,500	$ 13,000
2018	$ 140,000	$ 70,000	$ 70,000	$ 38,000	$ 19,000

Table: (3)

b.

To determine

Prepare a 2018 consolidated worksheet for Company P and Company S.

b.

Expert Solution

Explanation of Solution

Consolidated worksheet for Company P and Company S in 2018:

Company P and Company S
Consolidation Worksheet
Year ending December 31, 2018
			Consolidation entries
Accounts	Company P	Company S	Debit	Credit	Consolidated totals
Revenues	$ (710,000)	$ (360,000)	$ 140,000		$ (930,000)
Cost of goods sold	$ 305,000	$ 189,000	$ 19,000	$ 140,000
				$ 13,000	$ 360,000
Other operating expenses	$ 167,000	$ 81,000	$ 29,000		$ 277,000
Gain on sale of land	$ (16,000)	$ -	$ 16,000		$ -
Equity in Company S's earnings	$ (39,000)	$ -	$ 39,000		$ -
Net income	$ (293,000)	$ (90,000)			$ (293,000)

Balance Sheet
Cash and receivables	$ 102,000	$ 154,000		$ 62,000	$ 194,000
Inventory	$ 311,000	$ 110,000		$ 19,000	$ 402,000
Investment in Company S	$ 691,000	$ -	$ 25,000	$ 429,000
				$ 248,000
				$ 39,000
Trademarks	$ -	$ 58,000	$ 45,000		$ 103,000
Land, buildings, and equip. (net)	$ 638,000	$ 280,000		$ 16,000	$ 902,000
Patented technology	$ -	$ 125,000	$ 203,000	$ 29,000	$ 299,000
Total assets	$ 1,742,000	$ 727,000			$ 1,900,000

Liabilities	$ (462,000)	$ (220,000)	$ 62,000		$ (620,000)
Common stock	$ (400,000)	$ (100,000)			$ (400,000)
Additional paid-in capital	$ (300,000)	$ (50,000)			$ (300,000)
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)
Total liabilities and equity	$(1,742,000)	$ (727,000)			$ (1,900,000)

Table: (4)

Working note:

Statement of retained earnings	Company P	Company S	Debit	Credit	Consolidated totals
Retained earnings 1/1/18	$ (367,000)	$ (292,000)	$ 13,000		$ (367,000)
			$ 279,000
Net income	$ (293,000)	$ (90,000)			$ (293,000)
Dividends declared	$ 80,000	$ 25,000		$ 25,000	$ 80,000
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)

Table: (5)

Computation of unamortized amount of patented technology:

Value of Unamortized patented technology as on 31/12/2017
Original value as on 01/01/2017	$ 232,000
Less: Amortization during the year	$ 29,000
Unamortized value as on 31/12/2017	$ 203,000

Table: (6)

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Answer 4

Question

Chapter 5, Problem 36P

a.

To determine

Show how Company P computed its $39,000 equity in Company S’s earnings balance.

a.

Expert Solution

Explanation of Solution

Computation of equity in Company S’s earnings balance:

Particulars	Amount
Net income of the subsidiary	$(90,000)
Amortization of patented technology	$ 29,000
Unrealized gross profit of 2017 realized	$(13,000)
Unrealized gross profit of 2018 deferred	$ 19,000
Gain on sale of land deferred	$ 16,000
Equity in earnings	$(39,000)

Table: (1)

Working note:

Computation of closing stock in 2017:

Particulars	Amount
Sales price in 2017	$ 125,000
Resold %	74%
Unsold %	26.00%
Closing stock in 2017	$ 32,500

Table: (2)

Computation of unrealized profit on closing stock:

Year	Sales (A)	Cost of goods sold (B)	Profit C= (A) −(B)	Closing stock (D)	Profit on closing stock (E)={(C ×D) ÷A}
2017	$ 125,000	$ 75,000	$ 50,000	$ 32,500	$ 13,000
2018	$ 140,000	$ 70,000	$ 70,000	$ 38,000	$ 19,000

Table: (3)

b.

To determine

Prepare a 2018 consolidated worksheet for Company P and Company S.

b.

Expert Solution

Explanation of Solution

Consolidated worksheet for Company P and Company S in 2018:

Company P and Company S
Consolidation Worksheet
Year ending December 31, 2018
			Consolidation entries
Accounts	Company P	Company S	Debit	Credit	Consolidated totals
Revenues	$ (710,000)	$ (360,000)	$ 140,000		$ (930,000)
Cost of goods sold	$ 305,000	$ 189,000	$ 19,000	$ 140,000
				$ 13,000	$ 360,000
Other operating expenses	$ 167,000	$ 81,000	$ 29,000		$ 277,000
Gain on sale of land	$ (16,000)	$ -	$ 16,000		$ -
Equity in Company S's earnings	$ (39,000)	$ -	$ 39,000		$ -
Net income	$ (293,000)	$ (90,000)			$ (293,000)

Balance Sheet
Cash and receivables	$ 102,000	$ 154,000		$ 62,000	$ 194,000
Inventory	$ 311,000	$ 110,000		$ 19,000	$ 402,000
Investment in Company S	$ 691,000	$ -	$ 25,000	$ 429,000
				$ 248,000
				$ 39,000
Trademarks	$ -	$ 58,000	$ 45,000		$ 103,000
Land, buildings, and equip. (net)	$ 638,000	$ 280,000		$ 16,000	$ 902,000
Patented technology	$ -	$ 125,000	$ 203,000	$ 29,000	$ 299,000
Total assets	$ 1,742,000	$ 727,000			$ 1,900,000

Liabilities	$ (462,000)	$ (220,000)	$ 62,000		$ (620,000)
Common stock	$ (400,000)	$ (100,000)			$ (400,000)
Additional paid-in capital	$ (300,000)	$ (50,000)			$ (300,000)
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)
Total liabilities and equity	$(1,742,000)	$ (727,000)			$ (1,900,000)

Table: (4)

Working note:

Statement of retained earnings	Company P	Company S	Debit	Credit	Consolidated totals
Retained earnings 1/1/18	$ (367,000)	$ (292,000)	$ 13,000		$ (367,000)
			$ 279,000
Net income	$ (293,000)	$ (90,000)			$ (293,000)
Dividends declared	$ 80,000	$ 25,000		$ 25,000	$ 80,000
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)

Table: (5)

Computation of unamortized amount of patented technology:

Value of Unamortized patented technology as on 31/12/2017
Original value as on 01/01/2017	$ 232,000
Less: Amortization during the year	$ 29,000
Unamortized value as on 31/12/2017	$ 203,000

Table: (6)

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Answer 5

Chapter 5, Problem 36P

a.

To determine

Show how Company P computed its $39,000 equity in Company S’s earnings balance.

a.

Expert Solution

Explanation of Solution

Computation of equity in Company S’s earnings balance:

Particulars	Amount
Net income of the subsidiary	$(90,000)
Amortization of patented technology	$ 29,000
Unrealized gross profit of 2017 realized	$(13,000)
Unrealized gross profit of 2018 deferred	$ 19,000
Gain on sale of land deferred	$ 16,000
Equity in earnings	$(39,000)

Table: (1)

Working note:

Computation of closing stock in 2017:

Particulars	Amount
Sales price in 2017	$ 125,000
Resold %	74%
Unsold %	26.00%
Closing stock in 2017	$ 32,500

Table: (2)

Computation of unrealized profit on closing stock:

Year	Sales (A)	Cost of goods sold (B)	Profit C= (A) −(B)	Closing stock (D)	Profit on closing stock (E)={(C ×D) ÷A}
2017	$ 125,000	$ 75,000	$ 50,000	$ 32,500	$ 13,000
2018	$ 140,000	$ 70,000	$ 70,000	$ 38,000	$ 19,000

Table: (3)

b.

To determine

Prepare a 2018 consolidated worksheet for Company P and Company S.

b.

Expert Solution

Explanation of Solution

Consolidated worksheet for Company P and Company S in 2018:

Company P and Company S
Consolidation Worksheet
Year ending December 31, 2018
			Consolidation entries
Accounts	Company P	Company S	Debit	Credit	Consolidated totals
Revenues	$ (710,000)	$ (360,000)	$ 140,000		$ (930,000)
Cost of goods sold	$ 305,000	$ 189,000	$ 19,000	$ 140,000
				$ 13,000	$ 360,000
Other operating expenses	$ 167,000	$ 81,000	$ 29,000		$ 277,000
Gain on sale of land	$ (16,000)	$ -	$ 16,000		$ -
Equity in Company S's earnings	$ (39,000)	$ -	$ 39,000		$ -
Net income	$ (293,000)	$ (90,000)			$ (293,000)

Balance Sheet
Cash and receivables	$ 102,000	$ 154,000		$ 62,000	$ 194,000
Inventory	$ 311,000	$ 110,000		$ 19,000	$ 402,000
Investment in Company S	$ 691,000	$ -	$ 25,000	$ 429,000
				$ 248,000
				$ 39,000
Trademarks	$ -	$ 58,000	$ 45,000		$ 103,000
Land, buildings, and equip. (net)	$ 638,000	$ 280,000		$ 16,000	$ 902,000
Patented technology	$ -	$ 125,000	$ 203,000	$ 29,000	$ 299,000
Total assets	$ 1,742,000	$ 727,000			$ 1,900,000

Liabilities	$ (462,000)	$ (220,000)	$ 62,000		$ (620,000)
Common stock	$ (400,000)	$ (100,000)			$ (400,000)
Additional paid-in capital	$ (300,000)	$ (50,000)			$ (300,000)
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)
Total liabilities and equity	$(1,742,000)	$ (727,000)			$ (1,900,000)

Table: (4)

Working note:

Statement of retained earnings	Company P	Company S	Debit	Credit	Consolidated totals
Retained earnings 1/1/18	$ (367,000)	$ (292,000)	$ 13,000		$ (367,000)
			$ 279,000
Net income	$ (293,000)	$ (90,000)			$ (293,000)
Dividends declared	$ 80,000	$ 25,000		$ 25,000	$ 80,000
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)

Table: (5)

Computation of unamortized amount of patented technology:

Value of Unamortized patented technology as on 31/12/2017
Original value as on 01/01/2017	$ 232,000
Less: Amortization during the year	$ 29,000
Unamortized value as on 31/12/2017	$ 203,000

Table: (6)

Answer 6

Chapter 5, Problem 36P

a.

To determine

Show how Company P computed its $39,000 equity in Company S’s earnings balance.

a.

Expert Solution

Explanation of Solution

Computation of equity in Company S’s earnings balance:

Particulars	Amount
Net income of the subsidiary	$(90,000)
Amortization of patented technology	$ 29,000
Unrealized gross profit of 2017 realized	$(13,000)
Unrealized gross profit of 2018 deferred	$ 19,000
Gain on sale of land deferred	$ 16,000
Equity in earnings	$(39,000)

Table: (1)

Working note:

Computation of closing stock in 2017:

Particulars	Amount
Sales price in 2017	$ 125,000
Resold %	74%
Unsold %	26.00%
Closing stock in 2017	$ 32,500

Table: (2)

Computation of unrealized profit on closing stock:

Year	Sales (A)	Cost of goods sold (B)	Profit C= (A) −(B)	Closing stock (D)	Profit on closing stock (E)={(C ×D) ÷A}
2017	$ 125,000	$ 75,000	$ 50,000	$ 32,500	$ 13,000
2018	$ 140,000	$ 70,000	$ 70,000	$ 38,000	$ 19,000

Table: (3)

Answer 7

Chapter 5, Problem 36P

a.

To determine

Show how Company P computed its $39,000 equity in Company S’s earnings balance.

Answer 8

a.

Expert Solution

Explanation of Solution

Computation of equity in Company S’s earnings balance:

Particulars	Amount
Net income of the subsidiary	$(90,000)
Amortization of patented technology	$ 29,000
Unrealized gross profit of 2017 realized	$(13,000)
Unrealized gross profit of 2018 deferred	$ 19,000
Gain on sale of land deferred	$ 16,000
Equity in earnings	$(39,000)

Table: (1)

Working note:

Computation of closing stock in 2017:

Particulars	Amount
Sales price in 2017	$ 125,000
Resold %	74%
Unsold %	26.00%
Closing stock in 2017	$ 32,500

Table: (2)

Computation of unrealized profit on closing stock:

Year	Sales (A)	Cost of goods sold (B)	Profit C= (A) −(B)	Closing stock (D)	Profit on closing stock (E)={(C ×D) ÷A}
2017	$ 125,000	$ 75,000	$ 50,000	$ 32,500	$ 13,000
2018	$ 140,000	$ 70,000	$ 70,000	$ 38,000	$ 19,000

Table: (3)

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

To determine

Prepare a 2018 consolidated worksheet for Company P and Company S.

b.

Expert Solution

Explanation of Solution

Consolidated worksheet for Company P and Company S in 2018:

Company P and Company S
Consolidation Worksheet
Year ending December 31, 2018
			Consolidation entries
Accounts	Company P	Company S	Debit	Credit	Consolidated totals
Revenues	$ (710,000)	$ (360,000)	$ 140,000		$ (930,000)
Cost of goods sold	$ 305,000	$ 189,000	$ 19,000	$ 140,000
				$ 13,000	$ 360,000
Other operating expenses	$ 167,000	$ 81,000	$ 29,000		$ 277,000
Gain on sale of land	$ (16,000)	$ -	$ 16,000		$ -
Equity in Company S's earnings	$ (39,000)	$ -	$ 39,000		$ -
Net income	$ (293,000)	$ (90,000)			$ (293,000)

Balance Sheet
Cash and receivables	$ 102,000	$ 154,000		$ 62,000	$ 194,000
Inventory	$ 311,000	$ 110,000		$ 19,000	$ 402,000
Investment in Company S	$ 691,000	$ -	$ 25,000	$ 429,000
				$ 248,000
				$ 39,000
Trademarks	$ -	$ 58,000	$ 45,000		$ 103,000
Land, buildings, and equip. (net)	$ 638,000	$ 280,000		$ 16,000	$ 902,000
Patented technology	$ -	$ 125,000	$ 203,000	$ 29,000	$ 299,000
Total assets	$ 1,742,000	$ 727,000			$ 1,900,000

Liabilities	$ (462,000)	$ (220,000)	$ 62,000		$ (620,000)
Common stock	$ (400,000)	$ (100,000)			$ (400,000)
Additional paid-in capital	$ (300,000)	$ (50,000)			$ (300,000)
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)
Total liabilities and equity	$(1,742,000)	$ (727,000)			$ (1,900,000)

Table: (4)

Working note:

Statement of retained earnings	Company P	Company S	Debit	Credit	Consolidated totals
Retained earnings 1/1/18	$ (367,000)	$ (292,000)	$ 13,000		$ (367,000)
			$ 279,000
Net income	$ (293,000)	$ (90,000)			$ (293,000)
Dividends declared	$ 80,000	$ 25,000		$ 25,000	$ 80,000
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)

Table: (5)

Computation of unamortized amount of patented technology:

Value of Unamortized patented technology as on 31/12/2017
Original value as on 01/01/2017	$ 232,000
Less: Amortization during the year	$ 29,000
Unamortized value as on 31/12/2017	$ 203,000

Table: (6)

Answer 13

b.

To determine

Prepare a 2018 consolidated worksheet for Company P and Company S.

Answer 14

b.

Expert Solution

Explanation of Solution

Consolidated worksheet for Company P and Company S in 2018:

Company P and Company S
Consolidation Worksheet
Year ending December 31, 2018
			Consolidation entries
Accounts	Company P	Company S	Debit	Credit	Consolidated totals
Revenues	$ (710,000)	$ (360,000)	$ 140,000		$ (930,000)
Cost of goods sold	$ 305,000	$ 189,000	$ 19,000	$ 140,000
				$ 13,000	$ 360,000
Other operating expenses	$ 167,000	$ 81,000	$ 29,000		$ 277,000
Gain on sale of land	$ (16,000)	$ -	$ 16,000		$ -
Equity in Company S's earnings	$ (39,000)	$ -	$ 39,000		$ -
Net income	$ (293,000)	$ (90,000)			$ (293,000)

Balance Sheet
Cash and receivables	$ 102,000	$ 154,000		$ 62,000	$ 194,000
Inventory	$ 311,000	$ 110,000		$ 19,000	$ 402,000
Investment in Company S	$ 691,000	$ -	$ 25,000	$ 429,000
				$ 248,000
				$ 39,000
Trademarks	$ -	$ 58,000	$ 45,000		$ 103,000
Land, buildings, and equip. (net)	$ 638,000	$ 280,000		$ 16,000	$ 902,000
Patented technology	$ -	$ 125,000	$ 203,000	$ 29,000	$ 299,000
Total assets	$ 1,742,000	$ 727,000			$ 1,900,000

Liabilities	$ (462,000)	$ (220,000)	$ 62,000		$ (620,000)
Common stock	$ (400,000)	$ (100,000)			$ (400,000)
Additional paid-in capital	$ (300,000)	$ (50,000)			$ (300,000)
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)
Total liabilities and equity	$(1,742,000)	$ (727,000)			$ (1,900,000)

Table: (4)

Working note:

Statement of retained earnings	Company P	Company S	Debit	Credit	Consolidated totals
Retained earnings 1/1/18	$ (367,000)	$ (292,000)	$ 13,000		$ (367,000)
			$ 279,000
Net income	$ (293,000)	$ (90,000)			$ (293,000)
Dividends declared	$ 80,000	$ 25,000		$ 25,000	$ 80,000
Retained earnings 12/31/18	$ (580,000)	$ (357,000)			$ (580,000)

Table: (5)

Computation of unamortized amount of patented technology:

Value of Unamortized patented technology as on 31/12/2017
Original value as on 01/01/2017	$ 232,000
Less: Amortization during the year	$ 29,000
Unamortized value as on 31/12/2017	$ 203,000

Table: (6)