5-On January 2, 2018, Moving Motors, Inc. acquired Bourland Enterprises as a wholly-owned subsidiary, paying an excess of $800,000 over the book value of Bourland's net assets. Part of the excess was attributable to a building with a 7-year life undervalued by $350,000. The rest was goodwill. The parent uses the equity method of pre-consolidation Equity investment bookkeeping. The 2020 financial statements for the two companies are presented below.
5-On January 2, 2018, Moving Motors, Inc. acquired Bourland Enterprises as a wholly-owned subsidiary, paying an excess of $800,000 over the book value of Bourland's net assets. Part of the excess was attributable to a building with a 7-year life undervalued by $350,000. The rest was
|
|
Moving Motors, Inc. |
Bourland Enterprises |
|
Sales revenue |
$1,875,000 |
$781,000 |
|
Cost of goods sold |
-658,000 |
-451,000 |
|
Gross profit |
1,217,000 |
330,000 |
|
Operating expenses |
-325,000 |
-129,000 |
|
Equity income |
151,000 |
0 |
|
Net Income |
$1,043,000 |
$201,000 |
|
|
|
|
|
|
$2,307,000 |
$475,500 |
|
Net income |
1,043,000 |
201,000 |
|
Dividends |
-75,000 |
-23,400 |
|
Retained Earnings, 12/31/20 |
$3,275,000 |
$653,100 |
|
|
|
|
|
Cash and receivables |
$491,240 |
$540,200 |
|
Inventory |
785,000 |
515,200 |
|
Equity investment |
1,459,600 |
|
|
Property, plant & equipment (Net) |
3,852,000 |
346,500 |
|
Total Assets |
$6,587,840 |
$1,401,900 |
|
|
|
|
|
Accounts payable |
$408,000 |
$157,800 |
|
Accrued liabilities |
498,340 |
365,000 |
|
Notes payable |
478,500 |
69,500 |
|
Common stock |
350,000 |
70,000 |
|
Additional paid-in capital |
1,578,000 |
86,500 |
|
Retained Earnings, 12/31/20 |
3,275,000 |
653,100 |
|
Total Liabilities and Equities |
$6,587,840 |
$1,401,900 |
Required: At what amount will the following accounts appear on the consolidated financial statements for 2020?
a. Cost of Goods Sold
b. Equity Income
c. Operating Expenses
d. Cash and Receivables
e. Equity Investment
f. Property, Plant and Equipment (net of accumulated
g. Goodwill
h. Common Stock
i. Retained Earnings
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