Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2017, by issuing...

Transcribed Image Text:

Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2017, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $16.00 per share). As of that date, Bradford had stockholders' equity totaling $109,800. Land shown on Bradford's accounting records was undervalued by $19,700. Equipment (with a five-year remaining life) was undervalued by $7,300. A secret formula developed by Bradford was appraised at $23,200 with an estimated life of 20 years. The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no intra-entity payables on that date. Credit balances are indicated by parentheses. Revenues Cost of goods sold Depreciation expense Subsidiary earnings Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Retained earnings ,12/31/21 Current assets Investment in Bradford Company Land Buildings and equipment (net) Total assets Current liabilities Common stock Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and equity $ (647,000) 214,000 150,750 (91,430) (373,680) $ $ $ Allen Company $ (746,000) (373,680) 175,500 (944,180) 344,000 266,550 586,000 882,000 $ 2,078,550 $ (444,370) (600,000) (90,000) (944,180) $(2,078,550) Bradford Company $ (268,750) 101,500 73,200 0 $ (94,050) $ (110,400) (94,050) 40,000 $ (164,450) $ 106,000 0 65,700 207,000 $ 378,700 $ (149,250) (60,000) (5,000) (164,450) $ (378,700) a-1. Complete the table to show the allocation of the fair value in excess of book value. a-2. Complete the table to show the computation for Subsidiary Earnings. b. Complete the worksheet by consolidating the financial information for these two companies. Complete this question by entering your answers in the tabs below. Req A1 Total Req A2 Complete the table to show the allocation of the fair value in excess of book value. Annual Excess Amortizations Accounts Req B $ Amount 0 Life years years years years years < Req A1 $ 0 Req A2 > Complete this question by entering your answers in the tabs below. Req A1 Req A2 Equity earnings Req B Complete the table to show the computation for Subsidiary Earnings. (Negative amounts should be indicated by a minus sign.) Amounts $ 0 < Req A1 Req B > Complete this question by entering your answers in the tabs below. Req A1 Req A2 Complete the worksheet by consolidating the financial information for these two companies. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Input all amounts as positive values.) Accounts Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Equity in subsidiary earnings Net income Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 Balance Sheet Current assets Investment in Bradford Co. Land Buildings and equipment (net) Formula Total assets Current liabilities Common stock Additional paid-in capital Retained earnings 12/31 Req B Total liabilities and equity ALLEN AND SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2021 Allen Co. Bradford Co. $ (647,000) $ (268,750) 214,000 101,500 150,750 73,200 0 (91,430) $ (373,680) $ $ 344,000 $ 266,550 586,000 882,000 0 $ 2,078,550 $ 0 (746,000) (373,680) 175,500 $ (944,180) $ (164,450) 0 (94,050) (110,400) (94,050) 40,000 < Req A2 106,000 0 65,700 207,000 0 378,700 (444,370) (600,000) (90,000) (5,000) (944,180) (164,450) $ (2,078,550) $ (378,700) $ (149,250) (60,000) Consolidation Entries Credit Debit 0 Req B $ > 0 Consolidated Totals Show less A Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2017, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $16.00 per share). As of that date, Bradford had stockholders' equity totaling $109,800. Land shown on Bradford's accounting records was undervalued by $19,700. Equipment (with a five-year remaining life) was undervalued by $7,300. A secret formula developed by Bradford was appraised at $23,200 with an estimated life of 20 years. The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no intra-entity payables on that date. Credit balances are indicated by parentheses. Revenues Cost of goods sold Depreciation expense Subsidiary earnings Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Retained earnings ,12/31/21 Current assets Investment in Bradford Company Land Buildings and equipment (net) Total assets Current liabilities Common stock Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and equity $ (647,000) 214,000 150,750 (91,430) (373,680) $ $ $ Allen Company $ (746,000) (373,680) 175,500 (944,180) 344,000 266,550 586,000 882,000 $ 2,078,550 $ (444,370) (600,000) (90,000) (944,180) $(2,078,550) Bradford Company $ (268,750) 101,500 73,200 0 $ (94,050) $ (110,400) (94,050) 40,000 $ (164,450) $ 106,000 0 65,700 207,000 $ 378,700 $ (149,250) (60,000) (5,000) (164,450) $ (378,700) a-1. Complete the table to show the allocation of the fair value in excess of book value. a-2. Complete the table to show the computation for Subsidiary Earnings. b. Complete the worksheet by consolidating the financial information for these two companies. Complete this question by entering your answers in the tabs below. Req A1 Total Req A2 Complete the table to show the allocation of the fair value in excess of book value. Annual Excess Amortizations Accounts Req B $ Amount 0 Life years years years years years < Req A1 $ 0 Req A2 > Complete this question by entering your answers in the tabs below. Req A1 Req A2 Equity earnings Req B Complete the table to show the computation for Subsidiary Earnings. (Negative amounts should be indicated by a minus sign.) Amounts $ 0 < Req A1 Req B > Complete this question by entering your answers in the tabs below. Req A1 Req A2 Complete the worksheet by consolidating the financial information for these two companies. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Input all amounts as positive values.) Accounts Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Equity in subsidiary earnings Net income Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 Balance Sheet Current assets Investment in Bradford Co. Land Buildings and equipment (net) Formula Total assets Current liabilities Common stock Additional paid-in capital Retained earnings 12/31 Req B Total liabilities and equity ALLEN AND SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2021 Allen Co. Bradford Co. $ (647,000) $ (268,750) 214,000 101,500 150,750 73,200 0 (91,430) $ (373,680) $ $ 344,000 $ 266,550 586,000 882,000 0 $ 2,078,550 $ 0 (746,000) (373,680) 175,500 $ (944,180) $ (164,450) 0 (94,050) (110,400) (94,050) 40,000 < Req A2 106,000 0 65,700 207,000 0 378,700 (444,370) (600,000) (90,000) (5,000) (944,180) (164,450) $ (2,078,550) $ (378,700) $ (149,250) (60,000) Consolidation Entries Credit Debit 0 Req B $ > 0 Consolidated Totals Show less A