On January 1, 2017, Posh Company buys 100 % of the voting stock of Spice Inc....

 

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On January 1, 2017, Posh Company buys 100 % of the voting stock of Spice Inc. for $150 million in cash. After the acquisition, the trial balance of each company (in millions) at January 1, 2017, along with the fair value of Spice assets and liabilities and and their remaining useful lives, is: Trial Balance Spice Useful Posh Spice Fair Value Lives Current assets 46 Investment in Spice Property and equipment, net Intangible assets 150 6 years 5 years (7) (8) 25 26 38 14 21 16 Current liabilities Long-term debt Equity (29) (38) (168) (7) (8) (41) Total Goodwill resulting from the acquisition was $102 million. During 2017 Spice has net income of $10 million and pays dividends of $1 million. The pre-closing trial balance of each company (in millions) at December 31, 2017 is: 2017 Posh Spice Current assets 2$ 52 $ 14 Investment in Spice 158 Property and equipment, net 33 28 Intangible assets 12 19 Current liabilities (31) (6) Long-term debt (35) (5) Equity (168) (41) Dividends 1 Sales revenue (151) (127) Cost of goods sold 96 45 Operating expenses 43 72 Equity in net income (9) Total Requirements: Calculate equity in net income for Posh for 2017. Prepare the equity method entries for the Posh books for 2017. 3. 1. 2. Prepare the 12/31/17 eliminating entries (C, E, R and O). 4. Prepare the consolidation working papers at December 31, 2017. 5. Prepare the consolidated income statement for 2017. 6. Prepare the consolidated balance sheet at December 31, 2017. On January 1, 2017, Posh Company buys 100 % of the voting stock of Spice Inc. for $150 million in cash. After the acquisition, the trial balance of each company (in millions) at January 1, 2017, along with the fair value of Spice assets and liabilities and and their remaining useful lives, is: Trial Balance Spice Useful Posh Spice Fair Value Lives Current assets 46 Investment in Spice Property and equipment, net Intangible assets 150 6 years 5 years (7) (8) 25 26 38 14 21 16 Current liabilities Long-term debt Equity (29) (38) (168) (7) (8) (41) Total Goodwill resulting from the acquisition was $102 million. During 2017 Spice has net income of $10 million and pays dividends of $1 million. The pre-closing trial balance of each company (in millions) at December 31, 2017 is: 2017 Posh Spice Current assets 2$ 52 $ 14 Investment in Spice 158 Property and equipment, net 33 28 Intangible assets 12 19 Current liabilities (31) (6) Long-term debt (35) (5) Equity (168) (41) Dividends 1 Sales revenue (151) (127) Cost of goods sold 96 45 Operating expenses 43 72 Equity in net income (9) Total Requirements: Calculate equity in net income for Posh for 2017. Prepare the equity method entries for the Posh books for 2017. 3. 1. 2. Prepare the 12/31/17 eliminating entries (C, E, R and O). 4. Prepare the consolidation working papers at December 31, 2017. 5. Prepare the consolidated income statement for 2017. 6. Prepare the consolidated balance sheet at December 31, 2017.

Answer rating: 100% (QA)

1Equity in net income Item Amountmillions Current assets 52 Investment in Spice 158 Property and equipment 33 Intangible assets 12 Current liabilities ... View the full answer