This modifies and extends the preceding problem. However, this problem is self-contained because all the facts are reproduced here. Poseidon Publishing Company acquired 80% of the common shares of Neptune Book Company for $64 million cash at the start of the year. Immediately before the business combination each company had the following condensed balance sheet accounts (in millions):

1. Prepare a tabulation of the consolidated balance sheet accounts immediately after the acquisition.

Use the balance sheet equation format.

2. Suppose Poseidon and Neptune have the following results for the year:

Prepare income statements for the year for Poseidon, Neptune, and the consolidated entity.

3. Using the balance-sheet-equation format, present the effects of the operations for the year on Poseidon’s accounts and Neptune’s accounts. Also tabulate consolidated balance sheet accounts at the end of the year. Assume that liabilities are unchanged.

4. Suppose Neptune paid a cash dividend of $10 million. What accounts in number 3 would be affected and by how much?

Cash and other assets Accounts payable, etc Stockholders' equity Total equities Poseidorn $350 $110 240 $350 Neptune $100 20 80 $100 Poseidorn $330 245 Neptune Sales S110 Expenses 90