Olivia Parent Company acquired 85% of the outstanding common stock of Georgia Subsidiary on January 1, 2015
Fantastic news! We've Found the answer you've been seeking!
Question:
Olivia Parent Company acquired 85% of the outstanding common stock of Georgia Subsidiary on January 1, 2015 for $1,357,150. On this date, Subsidiary’s common stock and retained earnings balances were $1,000,000 and $300,000, respectively. The fair values of Subsidiary’s net assets were equal to their values except for a patent, which had a book value of $63,000, a fair value of $42,000, and a remaining life of 7 years and goodwill uniformly impaired for 12 years.
Financial statements for both companies as of December 31, 2018, are presented below: (non-controlling interest is measured as a direct percentage of the fair value of Subsidiary’s net assets)
ADDITIONAL INFORMATION:
- -During 2018, the Subsidiary sold merchandise costing $280,000 to Parent for $340,000. 2018 ending inventory of Parent consisted of 30% of the 2018 intercompany transfer of merchandise. The 2018 beginning inventory of Parent consisted of unconfirmed gross margins of $27,000 in intercompany transfers of merchandise
- -During the year 2018, the Subsidiary purchased $600,000 of merchandise from Parent. Parent sells merchandise to all customers at 25% above cost. Subsidiary’s beginning and ending inventories for 2018 contained $120,000 and $190,000, respectively, merchandise purchased from Parent.
- In June 2016, the Subsidiary sold land costing $42,000 to Parent for $30,000
- -On November 20, 2018, Parent sold land costing $17,000 to the subsidiary for $24,000
- -On July 2, 2016, Parent sold Subsidiary equipment that had cost Parent $300,000. At the time of the equipment sale, accumulated depreciation was $170,000 Subsidiary paid $270,000 for the equipment; its estimated remaining life is 7 (seven) years. The straight-line method is used.
- -On January 1, 2018, the Subsidiary sold Parent equipment that had cost Subsidiary $700,000. At the time of the equipment sale, accumulated depreciation was $350,000 for the equipment; its estimated remaining life is 5 (five ) years. Straight-line depreciation is used.
Determine the following using the data above:
- 1. consolidated retained earnings on December 31, 2018
- 2. consolidated assets on December 31, 2018
- 3. consolidated cost of sales
- 4. goodwill on December 31, 2018
- 5. income from the subsidiary for 2018
- 6. non-controlling interest net income
- 7. consolidated liabilities on December 31, 2018
- 8. consolidated equities on December 31, 2018
- 9. non-controlling interest on December 31, 2018.
- 10. consolidated depreciation and other expenses
Related Book For
Posted Date: