Prepare a consolidated balance sheet at acquisition and compute consolidated net income one year later On December
Question:
Prepare a consolidated balance sheet at acquisition and compute consolidated net income one year later
On December 31, 2016, Pam Corporation purchased 80 percent of the stock of Sun Company at book value. The data reported on their separate balance sheets immediately after the acquisition follow. At December 31, 2016, Pam Corporation owes Sun $20,000 on accounts payable. (All amounts are in thousands.)
Pam Sun
Assets
Cash $128 $72
Accounts receivable 180 136
Inventories 572 224
Investment in Sun 800
Equipment—net 1,520 700
$3,200 $1,132
Liabilities and Stockholders’ Equity
Accounts payable $160 $132
Common stock; $20 par 1,840 600
Retained earnings 1,200 400
$3,200 $1,132
REQUIRED
Prepare a consolidated balance sheet for Pam Corporation and Subsidiary on December 31, 2016.
2. Compute consolidated net income for 2017 assuming that Pam Corporation reported a separate income of $680,000 and Sun Company reported a net income of $360,000. (Separate incomes do not include income from the investment in Sun.)
Advanced Accounting
ISBN: 978-0134472140
13th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith