Suppose a parent company acquired a subsidiary on January 1, 2015 for $2,186,000. The purchase price was $1,066,200 above the
Question:
Suppose a parent company acquired a subsidiary on January 1, 2015 for $2,186,000. The purchase price was $1,066,200 above the subsidiary's book value of stockholders' equity of $1,119,800 on the acquisition date. Of this excess purchase price, $602,000 was allocated to Property, Plant and Equipment with a remaining economic useful life of 10 years and $464,200 was allocated to Goodwill. On the acquisition date, the subsidiary reported retained earnings equal to $847,550. The parent company uses the cost method of accounting for capital investments prior to consolidation. The financial statements of the parent company and its subsidiary for the year ended December 31, 2016 are as follows:
| Padre | Subsidiary | Padre | Subsidiary | |||
|---|---|---|---|---|---|---|
| Statement of income | Balance sheet | |||||
| Sales | $8,318,750 | $1.900.000 | Assets | |||
| Cost of goods sold | (5.989.500) | (1.089.000) | Money | $1,567,280 | $468,600 | |
| Gross profit | 2.329.250 | 811.000 | Accounts receivable | 2.462.900 | 421.300 | |
| Capital income | 37.400 | - | Inventory | 3.476.850 | 540.650 | |
| Operating expenses | (1.247.840) | (556.900) | Capital investment | 2.186.000 | - | |
| Lingresos grandchildren | $1,118,810 | $254,100 | Property, plant and equipment | 17.189.920 | 1.000.450 | |
| Statement of retained earnings | $26,882,950 | $2,431,000 | ||||
| BOY retained earnings | 5.801.070 | 937.750 | Liabilities and equity | |||
| Lingresos grandchildren | 1.118.810 | 254.100 | Accounts payable | $1,217,920 | $173,030 | |
| Dividends | (262,570) | (37.400) | Accumulated obligations | 1.447.270 | 226,270 | |
| Finalize retained earnings | $6,657,310 | $1,154,450 | Long term passives | 10.587.500 | 605.000 | |
| common actions | 1.025.060 | 121.000 | ||||
| APIC | 5.947.890 | 151.250 | ||||
| Retained earnings | 6.657.310 | 1.154.450 | ||||
| $26,882,950 | $2,431,000 |
For what amount will the following accounts appear in the consolidated financial statements?
Do not use negative signs with any of your answers.
| a. | Sales | $Answer |
| b. | Investment income | $Answer |
| C. | Operating expenses | $Answer |
| d. | Inventories | $Answer |
| e. | Capital investment | $Answer |
| F. | Property, plant and equipment, net | $Answer |
| g. | Goodwill | $Answer |
| h. | common actions | $Answer |
| i. | Retained earnings | $Answer |
Expert Answer:
To calculate the amounts that will appear in the consolidated financial statements we need to consid View the full answer
