Assuming Gold uses the equity method to account for investments and that Golds (unconsolidated) balance sheet on
Question:
Assuming Gold uses the equity method to account for investments and that Gold’s (unconsolidated) balance sheet on December 31, 20X6, reflected retained earnings of $2,000,000, what amount of retained earnings should be shown in the December 31, 20X6, consolidated balance sheet of Gold and its new subsidiary, Nugget?
a. $2,000,000
b. $2,600,000
c. $2,800,000
d. $3,150,000 Nugget Company’s balance sheet on December 31, 20X6, was as follows:
On December 31, 20X6, Gold Company acquired all of Nugget’s outstanding common stock for $1,500,000 cash. On that date, the fair (market) value of Nugget’s inventories was $450,000, and the fair value of Nugget’s property, plant, and equipment was $1,000,000. The fair values of all other assets and liabilities of Nugget were equal to their book values.
Step by Step Answer:
Advanced Financial Accounting
ISBN: 9781260165111
12th Edition
Authors: Theodore Christensen, David Cottrell, Cassy Budd