On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ had an acquisition date fair value of P138,500. On January 1, XYZ possessed equipment (5-year life) that was undervalued on its books P25,000.XYZ also had developed several secret formulas that ABC assessed at P50,000. Theses formulas, although not recorded on XYZ's financial records, were estimated to have a 20-year future life. ABC also determined that the inventory of XYZ is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As of December 31, the financial statements appeared as follows: ABC Revenues (from sales and P (300, 000) dividends) Cost of goods sold Expenses Net Income Retained earnings 1/1 Net Income Dividends paid Retained earnings 12/31 Cash and Receivables Inventory Investment in SS Equipment (net) Total Assets 140,000 20,000 P (140,000) P (300, 000) (140, 000) -0- P (440, 000) P 210, 000 150,000 301,500 398,500 P 1,060, 000 P (420, 000) (200, 000) (440, 000) Liabilities Common stock Retained earnings 12/31 Total Liabilities and Equities P (1,060,000) * XYZ P (200,000) 80,000 10, 000 P (110, 000) P (150, 000) (110, 000) 10,000 P (250, 000) P90, 000 110, 000 -0- 300,000 P500,000 P (150, 000) (100, 000) (250,000) P (500,000) Determine the consolidated assets as of December 31.
On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ had an acquisition date fair value of P138,500. On January 1, XYZ possessed equipment (5-year life) that was undervalued on its books P25,000.XYZ also had developed several secret formulas that ABC assessed at P50,000. Theses formulas, although not recorded on XYZ's financial records, were estimated to have a 20-year future life. ABC also determined that the inventory of XYZ is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As of December 31, the financial statements appeared as follows: ABC Revenues (from sales and P (300, 000) dividends) Cost of goods sold Expenses Net Income Retained earnings 1/1 Net Income Dividends paid Retained earnings 12/31 Cash and Receivables Inventory Investment in SS Equipment (net) Total Assets 140,000 20,000 P (140,000) P (300, 000) (140, 000) -0- P (440, 000) P 210, 000 150,000 301,500 398,500 P 1,060, 000 P (420, 000) (200, 000) (440, 000) Liabilities Common stock Retained earnings 12/31 Total Liabilities and Equities P (1,060,000) * XYZ P (200,000) 80,000 10, 000 P (110, 000) P (150, 000) (110, 000) 10,000 P (250, 000) P90, 000 110, 000 -0- 300,000 P500,000 P (150, 000) (100, 000) (250,000) P (500,000) Determine the consolidated assets as of December 31.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
Related questions
Question
Transcribed Image Text:On January 1, ABC Acquired 60 percent of the outstanding voting stock
of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ
had an acquisition date fair value of P138,500. On January 1, XYZ
possessed equipment (5-year life) that was undervalued on its books
P25,000. XYZ also had developed several secret formulas that ABC
assessed at P50,000. Theses formulas, although not recorded on XYZ's
financial records, were estimated to have a 20-year future life. ABC also
determined that the inventory of XYZ is overvalued by P10,000. 80% of
these inventories remain unsold by the end of the year. As of December
31, the financial statements appeared as follows: *
АВС
XYZ
P (300, 000)
P (200, 000)
Revenues (from sales and
dividends)
Cost of goods sold
Expenses
Net Income
140, 000
20, 000
P (140, 000)
80, 000
10, 000
P (110, 000)
P (300, 000)
(140, 000)
-0-
P (150, 000)
(110, 000)
10,000
P (250, 000)
Retained eamings 1/1
Net Income
Dividends paid
Retained eamings 12/31
P (440, 000)
P 210, 000
150, 000
301,500
398,500
P 1,060, 000
P90, 000
110, 000
-0-
Cash and Receivables
Inventory
Investment in SS
Equipment (net)
Total Assets
300, 000
P500, 000
P (420, 000)
(200, 000)
(440, 000)
P (1,060,000)
Liabilities
Common stock
P (150, 000)
(100, 000)
(250, 000)
P (500, 000)
Retained eamings 12/31
Total Liabilities and Equities
Determine the consolidated assets as of December 31.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT