Flounder purchased 100% of Sole for $325,000 on January 1 2020. On that date, equipment was considered undervalued by $60,000 and had a five year life, and other intangibles were overvalued by $10,000 and had a four year life. Book value of Sole on that date was $150,000. Goodwill accounts for the rest of the excess.

Below are the income and dividends for 2020 for Sole as reported by Sole:

2020

Income	$50,000
Dividends	$10,000

A.) Prepare a schedule of distribution of excess of cost/fair value at Jan 1, 2020 and any amortization of assets:

B.) Using the equity method, record the entries on the books of Flounder below to reflect activity with Sole for 2020, including the original purchase.

Dr. Cr.

c.) Below are the balances of the accounts for Flounder and Sole at December 31, 2020. Prepare consolidation entries on the worksheet and complete the consolidated statements. You must complete the flounder balance sheet first.

	Flounder	Sole	Dr.	Cr.	Consol.
Sales	200,000	185,000
Cost of Sales	60,000	70,000
Operating Expenses	15,000	65,000
	125,000	50,000
Income from Sole
Net Income		$50,000
Retained earnings Jan 1	300,000	80,000
Dividends	30,000	10,000
Retained Earings Dec 31		120,000
Cash	20,000	10,000
AR	30,000	5,000
Inventories	90,000	20,000
Investment in Sole
Plant, Property, Equipment	220,000	190,000
Goodwill
Other intangibles	30,000	15,000
	745,500	240,000
Accounts Payable	90,000	25,000
Long Term Notes Payable	70,000	25,000
Common stock	150,000	70,000
Retained Earnings		120,000
	745,500	240,000

Answer rating: 100% (QA)

a Schedule of distribution of excess of costFair value on 112020 and amortization of assets Particulars Allocation of books values over the fair value ... View the full answer