On January 1, BB Acquired 60 percent of the outstanding voting stock of SS for P260,000 cash consideration. The remaining 40 percent of SS had an acquisition date fair value of P65,000. On January 1, SS possessed equipment (5-year life) that was undervalued on its books P25,000. SS also had developed several secret formulas that BB assessed at P50,000. Theses formulas, although not recorded on SS's financial records, were estimated to have a 20-year future life. BB also determined that the inventory of SS 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: BB P (300, 000) P (200, 000) Revenues (from sales and dividends) Cost of goods sold Expenses 140, 000 20, 000 P (140, 000) P (110, 000) 80, 000 10, 000 Net Income Retained earnings 1/1 P (300, 000) P (150, 000) (140, 000) -0- Net Income (110, 000) 10,000 Dividends paid Retained earnings 12/31 P (440, 000) P (250, 000) Cash and Receivables P 210, 000 P90, 000 110, 000 -0- 150, 000 260, 000 440, 000 P 1,060, 000 Inventory Investment in SS Equipment (net) Total Assets 300, 000 P500, 000 P (420, 000) P (150, 000) (200, 000) (440, 000) P (1,060,000) P (500, 000) Liabilities Common stock (100, 000) (250, 000) Retained earnings 12/31 Total Liabilities and Equities Determine the consolidated assets as of December 31.
On January 1, BB Acquired 60 percent of the outstanding voting stock of SS for P260,000 cash consideration. The remaining 40 percent of SS had an acquisition date fair value of P65,000. On January 1, SS possessed equipment (5-year life) that was undervalued on its books P25,000. SS also had developed several secret formulas that BB assessed at P50,000. Theses formulas, although not recorded on SS's financial records, were estimated to have a 20-year future life. BB also determined that the inventory of SS 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: BB P (300, 000) P (200, 000) Revenues (from sales and dividends) Cost of goods sold Expenses 140, 000 20, 000 P (140, 000) P (110, 000) 80, 000 10, 000 Net Income Retained earnings 1/1 P (300, 000) P (150, 000) (140, 000) -0- Net Income (110, 000) 10,000 Dividends paid Retained earnings 12/31 P (440, 000) P (250, 000) Cash and Receivables P 210, 000 P90, 000 110, 000 -0- 150, 000 260, 000 440, 000 P 1,060, 000 Inventory Investment in SS Equipment (net) Total Assets 300, 000 P500, 000 P (420, 000) P (150, 000) (200, 000) (440, 000) P (1,060,000) P (500, 000) Liabilities Common stock (100, 000) (250, 000) Retained earnings 12/31 Total Liabilities and Equities 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
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Transcribed Image Text:On January 1, BB Acquired 60 percent of the outstanding voting stock of SS for P260,000 cash consideration. The remaining
40 percent of SS had an acquisition date fair value of P65,000. On January 1, SS possessed equipment (5-year life) that was
undervalued on its books P25,000. SS also had developed several secret formulas that BB assessed at P50,000. Theses
formulas, although not recorded on SS's financial records, were estimated to have a 20-year future life. BB also determined
that the inventory of SS 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:
BB
Revenues (from sales and dividends)
Cost of goods sold
Expenses
P (300, 000) P (200, 000)
140, 000
20, 000
P (140, 000) P (110, 000)
80, 000
10, 000
Net Income
Retained earnings 1/1
P (300, 000) P (150, 000)
(110, 000)
10,000
P (440, 000) P (250, 000)
Net Income
(140, 000)
Dividends paid
Retained earnings 12/31
-0-
P 210, 000
150, 000
260, 000
440, 000
P 1,060, 000
Cash and Receivables
P90, 000
110, 000
Inventory
Investment in SS
Equipment (net)
Total Assets
-0-
300, 000
P500, 000
Liabilities
P (420, 000) P (150, 000)
(200, 000)
(440, 000)
P (1,060,000) P (500, 000)
Common stock
(100, 000)
(250, 000)
Retained earnings 12/31
Total Liabilities and Equities
Determine the consolidated assets as of December 31.
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