On January 1, 2021, Waddington Company acquired Middleton Co. by issuing 55,000 shares of its common Stock
Question:
Waddington | Middleton | |
Sales revenue | $3,600,000 | $ 975,000 |
Cost of goods sold | (2,520,000) | (585,000) |
Gross profit | 1,080,000 | 390,000 |
Operating expenses | (684,000) | (253,500) |
Equity income | 99,000 | _ |
Net Income | $ 495,000 | $ 136,500 |
Retained Earnings, 1/1/21 | $1,830,500 | $ 503,750 |
Net income | 495,000 | 136,500 |
Dividends | (32,040) | (20,475) |
Retained Earnings, 12/31/21 | $2,293,460 | $ 619,775 |
Cash and receivables | $ 772,275 | $ 477,425 |
Inventory | 698,400 | 290,550 |
Equity investment | 1,178,525 | |
Property, plant & equipment (Net) | 3,719,520 | 537,550 |
Total Assets | $6,368,720 | $1,305,525 |
Accounts payable | $ 263,520 | $ 92,950 |
Accrued liabilities | 313,200 | 121,550 |
Notes payable | 1,250,000 | 325,000 |
Common stock | 407,000 | 65,000 |
Additional paid-in capital | 1,824,040 | 81,250 |
Retained Earnings, 12/31/11 | 2,293,400 | 619,775 |
Total Liabilities and Equities | $6,368,720 | $1,305,525 |
- Prepare FV allocation schedule
- Prepare all necessary consolidation entries for 2021 consolidated financial statements.
- Now assume that at year-end a goodwill impairment test is conducted before the consolidated statements are issued. The estimated fair value of the subsidiary is $1,100,000. The fair value of the identifiable net assets is $1,050,000. Prepare any journal entries resulting from the test.