Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $206,000 in cash. Jasmine had a book value of only $140,000 on that date. However, equipment (having an eight-year remaining life) was undervalued by $54,400 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $10,000. Subsequent to the acquisition, Jasmine reported the following:     Net Income Dividends Declared 2016 $ 50,000   $ 10,000   2017   60,000     40,000   2018   30,000     20,000     In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow:     Tyler Company   Jasmine Company Revenues—operating $ (310,000 )   $ (104,000 ) Expenses   198,000       74,000   Equipment (net)   320,000       50,000   Buildings (net)   220,000       68,000   Common stock   (290,000 )     (50,000 ) Retained earnings, 12/31/18   (410,000 )     (160,000 )     Determine the following account balances as of December 31, 2018: a.Investment in Jasmine Company b.Equity in Subsidiary Earnings c.Consolidated Net Income d.Consolidated Equipment (net) e.Consolidated Buildings (net) f.Consolidated Goodwill (net) g.Consolidated Common Stock h.Consolidated Retained Earnings, 12/31/18

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 26P
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Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $206,000 in cash. Jasmine had a book value of only $140,000 on that date. However, equipment (having an eight-year remaining life) was undervalued by $54,400 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $10,000. Subsequent to the acquisition, Jasmine reported the following:

 

  Net Income Dividends Declared
2016 $ 50,000   $ 10,000  
2017   60,000     40,000  
2018   30,000     20,000  
 


In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow:

 

  Tyler Company   Jasmine Company
Revenues—operating $ (310,000 )   $ (104,000 )
Expenses   198,000       74,000  
Equipment (net)   320,000       50,000  
Buildings (net)   220,000       68,000  
Common stock   (290,000 )     (50,000 )
Retained earnings, 12/31/18   (410,000 )     (160,000 )
 

 

Determine the following account balances as of December 31, 2018:

a.Investment in Jasmine Company

b.Equity in Subsidiary Earnings

c.Consolidated Net Income

d.Consolidated Equipment (net)

e.Consolidated Buildings (net)

f.Consolidated Goodwill (net)

g.Consolidated Common Stock

h.Consolidated Retained Earnings, 12/31/18

 

 

 

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