On June 30, Purl Corp. issued 150,000 shares of its $20 par common stock for which it received all of Scott Corp.'s common stock. The fair value of the common stock issued is equal to the carrying amount of Scott Corp.'s net assets. Both corporations continued to operate as separate businesses but with uniform accounting policies. Also, both maintain accounting records with years ending December 31. On December 31, Scott held in its inventory merchandise acquired from Purl on December 1 for $150,000, which included a $45,000 markup. Net income from separate company operations and dividends paid were as follows: Net Income 6 months ended 6/30 6 months ended 12/31 $1,950,000 Purl O $1,905,000 $750,000 825,000 Dividends Paid March 2 November 15 300,000 Assuming no consolidated adjustments other than those indicated by the facts given, consolidated net income is $1,650,000 Scott 950,000 $225,000 375,000
On June 30, Purl Corp. issued 150,000 shares of its $20 par common stock for which it received all of Scott Corp.'s common stock. The fair value of the common stock issued is equal to the carrying amount of Scott Corp.'s net assets. Both corporations continued to operate as separate businesses but with uniform accounting policies. Also, both maintain accounting records with years ending December 31. On December 31, Scott held in its inventory merchandise acquired from Purl on December 1 for $150,000, which included a $45,000 markup. Net income from separate company operations and dividends paid were as follows: Net Income 6 months ended 6/30 6 months ended 12/31 $1,950,000 Purl O $1,905,000 $750,000 825,000 Dividends Paid March 2 November 15 300,000 Assuming no consolidated adjustments other than those indicated by the facts given, consolidated net income is $1,650,000 Scott 950,000 $225,000 375,000
Chapter8: Consolidated Tax Returns
Section: Chapter Questions
Problem 36P
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Question
4.
Subject :- Accounting
Transcribed Image Text:On June 30, Purl Corp. issued 150,000 shares of its $20 par common stock for which it received all of Scott Corp.'s common
stock. The fair value of the common stock issued is equal to the carrying amount of Scott Corp.'s net assets. Both corporations
continued to operate as separate businesses but with uniform accounting policies. Also, both maintain accounting records with
years ending December 31. On December 31, Scott held in its inventory merchandise acquired from Purl on December 1 for
$150,000, which included a $45,000 markup. Net income from separate company operations and dividends paid were as
follows:
Net Income
6 months ended 6/30
6 months ended 12/31
$1,950,000
O $1,905,000
Purl
O $2,130,000
$750,000
825,000
Dividends Paid
March 2
November 15
300,000
Assuming no consolidated adjustments other than those indicated by the facts given, consolidated net income is
$1,650,000
Scott
950,000
$225,000
375,000
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