Question

The trial balances of Charles Company and its subsidiary, Lehto, Inc., are as follows on December 31, 2013:
On January 1, 2011, Charles Company exchanges 20,000 shares of its common stock, with a fair value of $20 per share, for all the outstanding stock of Lehto, Inc. Fixed assets with a 10-year life are understated by $50,000. Any excess of cost over book value is attributed to good-will. The stockholders’ equity of Lehto, Inc., on the purchase date is as follows:
Common stock ($5 par).. .. .. . .. . . .. .. . . .. . .. . $ 50,000
Paid-in capital in excess of par . . . .. . . . . .. . . . 15,000
Retained earnings .... .. .. .. . .. . . .. .. . . .. . .. . 135,000
Total equity . .... .. .. .. ... . . . . .. . . .. ... ... . .. $200,000
Required
1. Prepare a determination and distribution of excess schedule for the investment. (A value analysis schedule is not needed.)
2. Prepare the 2013 consolidated statements, including the income statement, retained earnings statement, and balance sheet. (A worksheet is not required.)


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  • CreatedApril 13, 2015
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