At January 1, 2021: Paris Company paid $280,000 for a 80% interest in Shallby Comp In...

  
 

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At January 1, 2021: Paris Company paid $280,000 for a 80% interest in Shallby Comp In this moment Shallby's Stockholders' Equity consisted: $150,000 $50,000 - Capital Stock - Retained Earnings Book values of Shallby's net assets were equal to their fair value on this date. The following will be presented the accounts of Paris Company and Shallby Company as December 31, 2021 (balance of the adjusting trial balance): Accounts Cash Dividends Receivables Accounts Receivables Land Property, Plant and Equipment Investment in Shallby Accounts Payable Dividends Payable Capital Stock Retained Earnings (Beg) Dividends Sales Revenues Cost of Goods Sold Operating Expenses Paris $8,250 8,000 40,000 50,000 100,000 ? 40,750 150,000 206,500 25,000 400,000 225,000 45,000 Shallby $35,000 50,000 30,000 150,000 35,000 10,000 150,000 50,000 20,000 190,000 125,000 25,000 1. You must analyze the data to calculate the implied fair value of Shallby Company and determine if there is any excess, which will be complete for goodwill. 2. Complete the following table with the controlling interest and noncontrolling interest values. Initial Investment Plus: Net Income Less: Dividend Ending Investment Controlling Interest - 80% Noncontrolling Interest - 20% 3. Complete the workpaper to consolidate the balance sheet for the parent company and subsidiary company, Paris and Shallby Company, respectively. Remember that there is a reciprocal account that are the dividends receivables and the dividends payable between both companies 4. Prepare the transactions of the eliminations or adjustments that you made in the working papers to carry our the combination of businesses. Present the Income Statement and the Retained Earnings Statement for Paris Company Paris Company Income Statement For the year ended December 31, 2021 Sales Revenues. Less: Cost of Goods Sold Gross Profit Less: Operating Expenses Net Income Paris Company Retained Earnings Statement For the year ended December 31, 2021 Retained Earnings, Beginning (Jan.1.2021) Plus: Net Income Less: Dividends Declared Retained Earnings, Ending (Dec.31.2021) Sales Revenues Less: Cost of Goods Sold Present the Income Statement and the Retained Earnings Statement for Shallby Company Shallby Company Income Statement For the year ended December 31, 2021 Gross Profit Less: Operating Expenses Net Income Shallby Company Retained Earnings Statement For the year ended December 31, 2021 Retained Earnings, Beginning (Jan.1.2021) Plus: Net Income $400,000 (225,000) $175,000 (45,000) $130,000 Less: Dividends Declared Retained Earnings, Ending (Dec.31.2021) $206,500 130,000 $336,500 (25,000) $311,500 $190,000 (125,000) $65,000 (25,000) $40,000 $50,000 40,000 $90,000 (20,000) $70,000 Assets Cash Accounts Dividends Receivables Accounts Receivables Land Property, Plant and Equipment Investment in Shallby Company Goodwill Total Assets Liabilities and Stockholders' Equity Accounts Payable Dividends Payable Capital Stock Retained Earnings Noncontrolling Interest Total Liabilities and Stockholders' Equity Paris Shallby Company Company Eliminatons or Adjustment Debit Credit Consolidated Balance Sheet At January 1, 2021: Paris Company paid $280,000 for a 80% interest in Shallby Comp In this moment Shallby's Stockholders' Equity consisted: $150,000 $50,000 - Capital Stock - Retained Earnings Book values of Shallby's net assets were equal to their fair value on this date. The following will be presented the accounts of Paris Company and Shallby Company as December 31, 2021 (balance of the adjusting trial balance): Accounts Cash Dividends Receivables Accounts Receivables Land Property, Plant and Equipment Investment in Shallby Accounts Payable Dividends Payable Capital Stock Retained Earnings (Beg) Dividends Sales Revenues Cost of Goods Sold Operating Expenses Paris $8,250 8,000 40,000 50,000 100,000 ? 40,750 150,000 206,500 25,000 400,000 225,000 45,000 Shallby $35,000 50,000 30,000 150,000 35,000 10,000 150,000 50,000 20,000 190,000 125,000 25,000 1. You must analyze the data to calculate the implied fair value of Shallby Company and determine if there is any excess, which will be complete for goodwill. 2. Complete the following table with the controlling interest and noncontrolling interest values. Initial Investment Plus: Net Income Less: Dividend Ending Investment Controlling Interest - 80% Noncontrolling Interest - 20% 3. Complete the workpaper to consolidate the balance sheet for the parent company and subsidiary company, Paris and Shallby Company, respectively. Remember that there is a reciprocal account that are the dividends receivables and the dividends payable between both companies 4. Prepare the transactions of the eliminations or adjustments that you made in the working papers to carry our the combination of businesses. Present the Income Statement and the Retained Earnings Statement for Paris Company Paris Company Income Statement For the year ended December 31, 2021 Sales Revenues. Less: Cost of Goods Sold Gross Profit Less: Operating Expenses Net Income Paris Company Retained Earnings Statement For the year ended December 31, 2021 Retained Earnings, Beginning (Jan.1.2021) Plus: Net Income Less: Dividends Declared Retained Earnings, Ending (Dec.31.2021) Sales Revenues Less: Cost of Goods Sold Present the Income Statement and the Retained Earnings Statement for Shallby Company Shallby Company Income Statement For the year ended December 31, 2021 Gross Profit Less: Operating Expenses Net Income Shallby Company Retained Earnings Statement For the year ended December 31, 2021 Retained Earnings, Beginning (Jan.1.2021) Plus: Net Income $400,000 (225,000) $175,000 (45,000) $130,000 Less: Dividends Declared Retained Earnings, Ending (Dec.31.2021) $206,500 130,000 $336,500 (25,000) $311,500 $190,000 (125,000) $65,000 (25,000) $40,000 $50,000 40,000 $90,000 (20,000) $70,000 Assets Cash Accounts Dividends Receivables Accounts Receivables Land Property, Plant and Equipment Investment in Shallby Company Goodwill Total Assets Liabilities and Stockholders' Equity Accounts Payable Dividends Payable Capital Stock Retained Earnings Noncontrolling Interest Total Liabilities and Stockholders' Equity Paris Shallby Company Company Eliminatons or Adjustment Debit Credit Consolidated Balance Sheet

Answer rating: 100% (QA)

1 Implied Fair Value of Shallby Company and Goodwill Calculation Total Consideration Paid 280000 Per... View the full answer