Assume a parent company acquired a subsidiary on January 1, 2015. The purchase price was $745,000 in excess of the subsidiary’s book value of Stockholders’ Equity on the acquisition date, and that excess was assigned to the following [A] assets:

The AAP asset relating to undervalued PPE with a 15-year useful life has been depreciated as part of the parent’s equity method accounting. The financial statements of the parent and its subsidiary for the year ended December 31, 2016, are as follows:

At what amount will the following accounts appear on the consolidated financial statements?

a.	Sales	$Answer
b.	Equity income	$Answer
c.	Operating expenses	$Answer
d.	Accounts receivable	$Answer
e.	Equity investment	$Answer
f.	Property plant and equipment (PPE) net	$Answer
g.	Goodwill	$Answer
h.	Common stock	$Answer
i.	Retained earnings	$Answer

Transcribed Image Text:

Original Original Useful Life (years) [A] Asset Amount Property, plant and equipment (PPE), net $360,000 15 Goodwill 385,000 Indefinite $745,000 Original Original Useful Life (years) [A] Asset Amount Property, plant and equipment (PPE), net $360,000 15 Goodwill 385,000 Indefinite $745,000

Answer rating: 100% (QA)

Answer Consolidated Income Statement Particulars Parent Subsidiary Elimination Total Amou... View the full answer