Selected amounts from the separate unconsolidated financial statements of Poe Corporation and its 90 percent-owned subsidiary, Saw

Question:

Selected amounts from the separate unconsolidated financial statements of Poe Corporation and its 90 percent-owned subsidiary, Saw Company, at December 31, 2011, are as follows (in thousands).
Selected amounts from the separate unconsolidated financial statements of Poe

ADDITIONAL INFORMATION
1. On January 2, 2011, Poe purchased 90 percent of Saw's 100,000 outstanding common stock for cash of $153,000. On that date, Saw's stockholders' equity equaled $150,000 and the fair values of Saw's assets and liabilities equaled their carrying amounts. Poe accounted for the combination as an acquisition. The difference between fair value and book value was due to goodwill.
2. On September 4, 2011, Saw paid cash dividends of $30,000.
3. On December 31, 2011, Poe recorded its equity in Saw's earnings.
4. On January 3, 2011, Saw sold equipment with an original cost of $30,000 and a carrying value of $15,000 to Poe for $36,000. The equipment had a remaining life of three years and was depreciated using the straight-line method by both companies.
5. During 2011, Saw sold merchandise to Poe for $60,000, which included a profit of $20,000. At December 31, 2011, half of this merchandise remained in Poe's inventory.
6. On December 31, 2011, Poe paid $91,000 to purchase half of the outstanding bonds issued by Saw. The bonds mature on December 31, 2017, and were originally issued at par. These bonds pay interest annually on December 31 of each year, and the interest was paid to the prior investor immediately before Poe's purchase of the bonds.
REQUIRED
Determine the amounts at which the following items will appear in the consolidated financial statements of Poe Corporation and Subsidiary for the year ended December 31, 2011.
1. Cash
2. Equipment less accumulated depreciation
3. Investment in Saw
4. Bonds payable (net of unamortized discount)
5. Common stock
6.
Beginning retained earnings
7. Dividends paid
8. Gain on retirement of bonds
9. Cost of goods sold
10. Interest expense
11. Depreciation expense

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Advanced Accounting

ISBN: 978-0133451863

12th edition

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

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