In 1/1/2019 company A purchased 75% of company B outstanding share capital cash of 25000 $,...

  

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In 1/1/2019 company A purchased 75% of company B outstanding share capital cash of 25000 $, and it issued 50,000 shares for investment. The book value of issued shares is 6$, and market value is 15$. And it paid 4000$ cash as a commission and 8000$ auditing and legal expenses for combination. Company A used purchase method to account for investment in company B and used incomplete equity method to address the change of investment account. Below are the financial statements of A and B companies before investment. Account Cash Receivables Inventory Equipment Cars Total assets Payable Share capital Additional paid-in capital Retained Earnings Total Company A 190000 130000 180000 100000 60000 660000 210000 350000 75000 25000 660000 Company B book value fair value 60000 120000 45000 80000 60000 50000 40000 80000 10000 90000 215000 420000 65000 20000 120000 20000 10000 215000 The financial statement of parent and subsidiary at 31/12/2019 reported as follow: Sales Cost of goods sold Gross profit Income statements at 31/12/2019 Managerial and sales expenses Net profit Investment profit in subsidiary Year net profit Retained earning 1/1 Year profits or losses Dividends Retained earnings 31/12 Cash Receivables Inventory Prepaid dividends Investment in company B Equipment's, net Cars (130000) 36125 A company Retained earnings at 31/12/2019 A company 13000 153125 800000 (650000) 123000 165000 175000 18750 784375 80000 30000 150000 (25000) 125000 28125 153125 SFP on 31/12/2019 A company B company 150000 (80000) 70000 (10000) 60000 B company 10000 60000 (25000) 45000 85000 13000 B company 44000 85000 48000 Total assets Payable Accrued dividends Share capital Additional paid in capital Retained earnings Total liabilities and equity 1376125 35000 130000 650000 525000 36125 1376125 275000 65000 18750 120000 20000 45000 275000 The following are additional information related to subsidiary company: 1- Remaining age of Equipment that are in the subsidiary company at date of acquisition (1/1/2019) is 4 years. 2- At the year of 2019, 75% of inventory have been sold. And remaining inventory have been sold on 2020. 3- Remaining age of Cars that are in the subsidiary company at date of acquisition (1/1/2019) is 4 years. Requirement: 1- Prepare the consolidated financial statement at the date of acquisition. 2- Prepare the consolidate financial statements for the year of acquisition. In 1/1/2019 company A purchased 75% of company B outstanding share capital cash of 25000 $, and it issued 50,000 shares for investment. The book value of issued shares is 6$, and market value is 15$. And it paid 4000$ cash as a commission and 8000$ auditing and legal expenses for combination. Company A used purchase method to account for investment in company B and used incomplete equity method to address the change of investment account. Below are the financial statements of A and B companies before investment. Account Cash Receivables Inventory Equipment Cars Total assets Payable Share capital Additional paid-in capital Retained Earnings Total Company A 190000 130000 180000 100000 60000 660000 210000 350000 75000 25000 660000 Company B book value fair value 60000 120000 45000 80000 60000 50000 40000 80000 10000 90000 215000 420000 65000 20000 120000 20000 10000 215000 The financial statement of parent and subsidiary at 31/12/2019 reported as follow: Sales Cost of goods sold Gross profit Income statements at 31/12/2019 Managerial and sales expenses Net profit Investment profit in subsidiary Year net profit Retained earning 1/1 Year profits or losses Dividends Retained earnings 31/12 Cash Receivables Inventory Prepaid dividends Investment in company B Equipment's, net Cars (130000) 36125 A company Retained earnings at 31/12/2019 A company 13000 153125 800000 (650000) 123000 165000 175000 18750 784375 80000 30000 150000 (25000) 125000 28125 153125 SFP on 31/12/2019 A company B company 150000 (80000) 70000 (10000) 60000 B company 10000 60000 (25000) 45000 85000 13000 B company 44000 85000 48000 Total assets Payable Accrued dividends Share capital Additional paid in capital Retained earnings Total liabilities and equity 1376125 35000 130000 650000 525000 36125 1376125 275000 65000 18750 120000 20000 45000 275000 The following are additional information related to subsidiary company: 1- Remaining age of Equipment that are in the subsidiary company at date of acquisition (1/1/2019) is 4 years. 2- At the year of 2019, 75% of inventory have been sold. And remaining inventory have been sold on 2020. 3- Remaining age of Cars that are in the subsidiary company at date of acquisition (1/1/2019) is 4 years. Requirement: 1- Prepare the consolidated financial statement at the date of acquisition. 2- Prepare the consolidate financial statements for the year of acquisition.