GEN CMB ADV FINCL ACCT; Connect Access Card
11th Edition
ISBN: 9781259546648
Author: Theodore E. Christensen
Publisher: McGraw-Hill Education
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Question
Chapter 6, Problem 6.33P
To determine
Introduction: A consolidated worksheet is used to prepare the consolidated financial statements of the parent company and its subsidiary. It reflects the individual values of the parent and the subsidiary and then one consolidated figure for both the entities.
Three part consolidation worksheet for financial year ending December 31, 20X9
Expert Solution & Answer
Answer to Problem 6.33P
The consolidated net income as per consolidated worksheet is $498,000
The consolidated
The consolidated total assets and liabilities as per consolidated worksheet is $4,786,000
Explanation of Solution
Consolidated worksheet
| Particulars | F $ | B $ | Eliminations | Consolidated $ | |
| Income statement | Debit $ | Credit $ | |||
| Sales | 3,800,000 | 1,500,000 | 180,000 | 5,120,000 | |
| Gain on sale of warehouse | 30,000 | 30,000 | |||
| Less: | |||||
| Cost of goods sold | (2,360,000) | (870,000) | 162,000 | (3,068,000) | |
| Operating expenses | (1,100,000) | (440,000) | 9,000 | (1,549,000) | |
| 35000 | (35,000) | ||||
| Income from B | 128,000 | 172,000 | 44,000 | 0 | |
| Net income | 498,000 | 190,000 | 396,000 | 206,000 | 498,000 |
| Statement of retained earnings | |||||
| Retained earnings Jan 1 | 440,000 | 156,000 | 156,000 | 440,000 | |
| Income, from above | 498,000 | 190,000 | 396,000 | 206,000 | 498,000 |
| Dividends declared | (40,000) | 0 | |||
| Retained earnings as on Dec 1 carried forward | 938,000 | 306,000 | 552,000 | 246,000 | 938,000 |
| Balance sheet | |||||
| Cash | 570,000 | 150,000 | 720,000 | ||
| 860,000 | 350,000 | 86,000 | 1,124,000 | ||
| Inventories | 1,060,000 | 410,000 | 18,000 | 1,452,000 | |
| Land, building and equipment | 1,320,000 | 680,000 | 54,000 | 2,054,000 | |
| Less: Accumulated | (370,000) | (210,000) | 9,000 | (589,000) | |
| Investment in B | 838,000 | 768,000 | |||
| 70,000 | 0 | ||||
| Goodwill | 25,000 | 25,000 | |||
| Total assets | 4,278,000 | 1,380,000 | 79,000 | 951,000 | 4,786,000 |
| Accounts payable and accrued expenses | 1,340,000 | 594,000 | 86,000 | 1,848,000 | |
| Common stock | 1,700,000 | 400,000 | 400,000 | 1,700,000 | |
| Additional paid in capital | 300,000 | 80,000 | 80,000 | 300,000 | |
| Retained earnings | 938,000 | 306,000 | 552,000 | 246,000 | 938,000 |
| Total liabilities and equity | 4,278,000 | 1,380,000 | 1,118,000 | 246,000 | 4,786,000 |
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Consolidating Eliminating Entries, Date of Acquisition: U.S. GAAP and IFRS
Plummer Corporation acquired 90 percent of Softek Technologies’ voting stock by issuing 200,000 shares of $1 par common stock with a fair value of $100,000,000. In addition, Plummer paid $2,000,000 in cash to the consultants and accountants who advised in the acquisition. Softek’s shareholders’ equity at the date of acquisition is as follows:
Common stock
$400,000
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(10,000,000)
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(1,000,000)
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$8,900,000
Softek's assets and liabilities were carried at fair value except as noted below:
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Plant assets, net
$12,000,000
$6,000,000
Trademarks
--
2,000,000
Customer lists
--
3,000,000
The fair value of the noncontrolling interest is estimated to be $9,000,000 at the date of acquisition.
E 1-5 Journal entries to record an acquisition with direct costs and fair value/book value differences
On January 1, Pop Corporation pays $400,000 cash and also issues 36,000 shares of $10 par common stock with a market value of $660,000 for all the outstanding common shares of Son Corporation. In addition, Pop pays $60,000 for registering and issuing the 36,000 shares and $140,000 for the other direct costs of the business combination, in which Son Corporation is dissolved. Summary balance sheet information for the companies immediately before the merger is as follows (in thousands):
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Cash
$ 700
$ 80
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Inventories
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160
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Other current assets
60
40
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Plant assets—net
520
360
560
Total assets
$1,520
$640
$880
Current liabilities
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$ 60
$ 60
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160
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Chapter 6 Solutions
GEN CMB ADV FINCL ACCT; Connect Access Card
Ch. 6 - Why must inventory transfers to related companies...Ch. 6 - Why is there a need for a consolidation entry when...Ch. 6 - Prob. 6.3QCh. 6 - How do unrealized intercompany profits on a...Ch. 6 - How do unrealized intercompany profits on an...Ch. 6 - Prob. 6.6QCh. 6 - Prob. 6.9QCh. 6 - Prob. 6.10QCh. 6 - How is the amount of consolidated retained...Ch. 6 - How will the elimination of unrealized...
Ch. 6 - Prob. 6.14QCh. 6 - Is an inventory sale from one subsidiary to...Ch. 6 - Prob. 6.16QCh. 6 - Prob. 6.1.1ECh. 6 - Prob. 6.1.2ECh. 6 - MultipleChoice Questions on Intercompany Inventory...Ch. 6 - MultipleChoice Questions on Intercompany Inventory...Ch. 6 - Prob. 6.1.5ECh. 6 - Prob. 6.1.6ECh. 6 - Prob. 6.3.1ECh. 6 - Prob. 6.3.2ECh. 6 - Prob. 6.3.3ECh. 6 - Prob. 6.4.1ECh. 6 - Prob. 6.4.2ECh. 6 - Prob. 6.4.3ECh. 6 - Prob. 6.4.4ECh. 6 - Prob. 6.5.1ECh. 6 - Prob. 6.5.2ECh. 6 - Prob. 6.5.3ECh. 6 - Prob. 6.7ECh. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Prob. 6.11ECh. 6 - Prob. 6.12ECh. 6 - Prob. 6.13ECh. 6 - Prob. 6.15ECh. 6 - Prior-Period Inventory Profits Home Products...Ch. 6 - Prob. 6.17PCh. 6 - Prob. 6.18PCh. 6 - Prob. 6.19PCh. 6 - Prob. 6.20PCh. 6 - Prob. 6.21PCh. 6 - Prob. 6.22PCh. 6 - Prob. 6.24PCh. 6 - Prob. 6.26PCh. 6 - Prob. 6.27PCh. 6 - Prob. 6.28PCh. 6 - Prob. 6.29PCh. 6 - Prob. 6.30PCh. 6 - Prob. 6.31PCh. 6 - Prob. 6.33PCh. 6 - Prob. 6.34PCh. 6 - Prob. 6.35APCh. 6 - Prob. 6.36AP
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