Question

Parker, Inc., acquires 70 percent of Sawyer Company for $420,000. The remaining 30 percent of Sawyer’s outstanding shares continue to trade at a collective value of $174,000. On the acquisition date, Sawyer has the following accounts:


The buildings have a 10-year life. In addition, Sawyer holds a patent worth $140,000 that has a five year life but is not recorded on its financial records. At the end of the year, the two companies report the following balances:


a. Assume that the acquisition took place on January 1. What figures would appear in a consolidated income statement for this year?
b. Assume that the acquisition took place on April 1. Sawyer’s revenues and expenses occurred uniformly throughout the year. What amounts would appear in a consolidated income statement for thisyear?


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  • CreatedOctober 04, 2014
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