Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $732,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $604,900. Credit balances are indicated by parentheses.
Adams
Clay
Current assets
$
326,000
$
290,000
Investment in Clay
732,300
0
Equipment
781,900
526,000
Liabilities
(280,000
)
(170,000
)
Common stock
(350,000
)
(150,000
)
Retained earnings, 1/1/20
(1,210,200
)
(496,000
)
In 2020, Clay earns a net income of $62,700 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $193,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows:
Adams
Clay
Revenues
$
(452,000
)
$
(272,000
)
Expenses
327,700
204,000
Investment…
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses.
Adams
Clay
Current assets
$
382,000
$
272,000
Investment in Clay
713,300
0
Equipment
837,000
584,000
Liabilities
(202,000
)
(224,000
)
Common stock
(350,000
)
(150,000
)
Retained earnings, 1/1/20
(1,380,300
)
(482,000
)
In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows:
Adams
Clay
Revenues
$
(544,000
)
$
(286,000
)
Expenses
394,400
214,500
Investment…
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses.
Adams
Clay
Current assets
$
382,000
$
272,000
Investment in Clay
713,300
0
Equipment
837,000
584,000
Liabilities
(202,000
)
(224,000
)
Common stock
(350,000
)
(150,000
)
Retained earnings, 1/1/20
(1,380,300
)
(482,000
)
In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows:
Adams
Clay
Revenues
$
(544,000
)
$
(286,000
)
Expenses
394,400
214,500
Investment…
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