On January 1 , 2 0 2 2 , an investor acquired 1 0 0 % of
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Question:
On January an investor acquired of the voting common stock of an investee on January in a transaction.
As a result of the acquisition, the investor recognized no goodwill and no bargain purchase gain in the postacquisition consolidated financial statements
The acquisition date fair value of the property and equipment was $ more than its carrying amount.
For all other assets and liabilities, the preacquisition amounts reported on the investee's balance sheet were equal to
their respective fair values. The purchaser believes the property and equipment will have an additional years of useful life
The investor uses the equity method to account for its preconsolidation investment in the investee.
In addition, there are no intercompany transactions between the investor and investee.
The following summarized preconsolidation financial statement information is for the year ending December :
Income Statement: Investor Investee
Revenues
Income from Investee
Expenses
Net Income $ $
Retained Earnings Statement: Investor Investee
Retained earnings, January
Net Income
Dividends declared
Retained earnings, December $ $
Balance Sheet Investor Investee
Investment in Investee
All other assets
Total assets $ $
Liabilities
Common Stock & APIC
Retained Earnings
Total liabilities and equity $ $
Prepare the "Allocation schedule", as we have discusseddone in class for the purchase of the investee on the acquisition date. Worth points
Prepare the T Accounts for the "Investment in Investee" account, showing how the parent arrived at their balance of $ as of December Identify all debits and credits in T account. Worth points
Prepare the T Accounts for the "Income from Investee" account, showing how the parent arrived at their balance of $ as of December Identify all debits and credits in T account. Worth points
What amount of net income will be reported in the consolidated income statement for the year ending December Worth points
What amount of retained earnings will appear in the consolidated balance sheet at December Worth points
What amount of expenses will appear in the consolidated income statement for the year ending December Worth points
Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
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