Required: Prepare a 2021 consolidated Income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company, elects to amortize goodwill over a 10-year period.
Required: Prepare a 2021 consolidated Income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company, elects to amortize goodwill over a 10-year period.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 30E
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Question
9
![Angela Corporation (a private company) acquired all of the outstanding voting stock of Eddy Tech, Inc., on January 1, 2021, In exchange
for $9,000,000 in cash. At the acquisition date, Eddy Tech's stockholders' equity was $7,200,000 Including retained earnings of
$3,000,000.
At the acquisition date, Angela prepared the following fair value allocation schedule for its newly acquired subsidiary:
Consideration transferred
Eddy's stockholder's equity
Excess fair over book value
to patented technology (5-year remaining life)
to trade names (indefinite remaining life)
to equipment (8-year remaining life)
Goodwill
$ 150,000
500,000
50,000
Sales
Cost of goods sold
Depreciation expense
Amortization expense
Other operating expenses
Net income
$ 9,000,000
7,200,000
$ 1,800,000
At the end of 2021, Angela and Eddy Tech report the following amounts from their individually maintained account balances, before
consideration of their parent-subsidiary relationship. Parentheses Indicate a credit balance.
Angela
Eddy Tech
$ (7,850,000) $ (2,400,000)
4,200,000
1,300,000
425,000
48,000
250,000
12,000
75,000
53,750
$ (2,900,000) $
(986,250)
700,000
$ 1,100,000
Required:
Prepare a 2021 consolidated Income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company,
elects to amortize goodwill over a 10-year period.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1c36d334-d677-4a5a-b7b0-2a7b69cecd25%2F454355f2-d3a8-4e00-ade2-265f107558f3%2Ffgk3a4_processed.png&w=3840&q=75)
Transcribed Image Text:Angela Corporation (a private company) acquired all of the outstanding voting stock of Eddy Tech, Inc., on January 1, 2021, In exchange
for $9,000,000 in cash. At the acquisition date, Eddy Tech's stockholders' equity was $7,200,000 Including retained earnings of
$3,000,000.
At the acquisition date, Angela prepared the following fair value allocation schedule for its newly acquired subsidiary:
Consideration transferred
Eddy's stockholder's equity
Excess fair over book value
to patented technology (5-year remaining life)
to trade names (indefinite remaining life)
to equipment (8-year remaining life)
Goodwill
$ 150,000
500,000
50,000
Sales
Cost of goods sold
Depreciation expense
Amortization expense
Other operating expenses
Net income
$ 9,000,000
7,200,000
$ 1,800,000
At the end of 2021, Angela and Eddy Tech report the following amounts from their individually maintained account balances, before
consideration of their parent-subsidiary relationship. Parentheses Indicate a credit balance.
Angela
Eddy Tech
$ (7,850,000) $ (2,400,000)
4,200,000
1,300,000
425,000
48,000
250,000
12,000
75,000
53,750
$ (2,900,000) $
(986,250)
700,000
$ 1,100,000
Required:
Prepare a 2021 consolidated Income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company,
elects to amortize goodwill over a 10-year period.
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