Assume a parent company acquired a subsidiary on January 1, 2XX1. The purchase price was $440,000...

Transcribed Image Text:

Assume a parent company acquired a subsidiary on January 1, 2XX1. The purchase price was $440,000 in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date, and that excess was assigned to the following assets: Asset Property, plant and equipment (PPE), net Patent Original Amount Original Useful Life $136,000 17 years 144,000 12 years The parent company uses the cost method of pre-consolidation Equity Investment bookkeeping. Any remaining excess is allocated to Goodwill. The Goodwill asset has been tested annually for impairment and has not been found to be impaired. Complete the consolidated income statement for the year ended December 31, 2XX5: Note: Use negatives to indicate items that reduce net income. Income Statement Sales Cost of goods sold Gross profit Investment income Operating expenses Net income Parent Subsidiary Consolidated $660,000 $ $3,000,000 (1,800,000) (356,000) 0 1,200,000 304,000 40,000 (560,000) (200,000) $680,000 $104,000 $ 0 Assume a parent company acquired a subsidiary on January 1, 2XX1. The purchase price was $440,000 in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date, and that excess was assigned to the following assets: Asset Property, plant and equipment (PPE), net Patent Original Amount Original Useful Life $136,000 17 years 144,000 12 years The parent company uses the cost method of pre-consolidation Equity Investment bookkeeping. Any remaining excess is allocated to Goodwill. The Goodwill asset has been tested annually for impairment and has not been found to be impaired. Complete the consolidated income statement for the year ended December 31, 2XX5: Note: Use negatives to indicate items that reduce net income. Income Statement Sales Cost of goods sold Gross profit Investment income Operating expenses Net income Parent Subsidiary Consolidated $660,000 $ $3,000,000 (1,800,000) (356,000) 0 1,200,000 304,000 40,000 (560,000) (200,000) $680,000 $104,000 $ 0

Answer rating: 100% (QA)

To complete the consolidated income statement for the year ended December 31 2XX5 we need to conside... View the full answer