On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. On this date, Solar has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Solar Company are as follows:

On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of 10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributable to goodwill.
1. Using this information or the information in the following statements for the year ended December 31, 2016, prepare a determination and distribution of excess schedule.
2. Complete the vertical worksheet for consolidated financial statements for 2016.

Transcribed Image Text:

2015 Netincome Dividends. $60,000 20,000 2016 $90,000 30,000 Paro Com Solar Com Statemen Accounts Income Statement Net Sales.. Cost of Goods Sold Operating Expenses Subsidiary Income Noncontrolling Interest in Income.. . (520,000 300,000 120,000 (72,000 450,000] 260,000 100,000 Net Income 172 90 Retained Eamings Statement: Balance, January 1, 2016-Paro Company Balance, January 1, 2016-Solar Company Net Income (from above Dividends Declared-Paro Company Dividends Declared-Solar Company 214,000 (190,000] (90,000] (172,000 50,000 30,000 (250,000] Balance, December 31, 2016 Consolidated Balance Sheet (336,000] 100,000 136,000 400,000 50,000 50,000 180,000 Other Current Assets Investment in Solar Company 50,000 Building and Equipment Accumulated Depreciation Goodwill Other Intangibles Current Liabilities Bonds Payable Other Long-Term Liabilities. Common Stock-Paro Company Other Paid-In Capital in Excess of Par-Paro Company Common Stock-Solar Company Other Paid-In Capital in Excess of Par-Solar Company Retained Earnings, December 31, 2016(from above] 350,000 (100,000] 320,000 (60,000] 20,000 (120,000] (40,000] (100,000] 200,000 200,000) (100,000] (50,000 (100,000] 250,000 336,000 0 Totals