Question

On June 30, 2011, Plaster, Inc., paid $916,000 for 80 percent of Stucco Company’s outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling interest at $229,000. At acquisition date, Stucco reported the following book values for its assets and liabilities:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,000
Accounts receivable . . . . . . . . . . . . . . . . 127,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . 203,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,000
Buildings . . . . . . . . . . . . . . . . . . . . . . . . 175,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . 300,000
Accounts payable . . . . . . . . . . . . . . . . . (35,000)

On June 30, Plaster allocated the excess acquisition-date fair value over book value to Stucco’s assets as follows:
Equipment (3-year life) . . . . . . . . . . . . . . $ 75,000
Database (10-year life) . . . . . . . . . . . . . . 175,000

At the end of 2011, the following comparative (2010 and 2011) balance sheets and consolidated income statement were available:


Additional Information for 2011
• On December 1, Stucco paid a $40,000 dividend. During the year, Plaster paid $100,000 in dividends.
• During the year, Plaster issued $800,000 in long-term debt at par.
• Plaster reported no asset purchases or dispositions other than the acquisition of Stucco.
Prepare a 2011 consolidated statement of cash flows for Plaster and Stucco. Use the indirect method of reporting cash flows from operatingactivities.


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  • CreatedOctober 04, 2014
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