Simple equity method adjustments consolidated worksheet Problem Solution help

SUPERIOR-PAPERS.COM essay writing company is the ideal place for homework help. If you are looking for affordable, custom-written, high-quality and non-plagiarized papers, your student life just became easier with us. Click the button below to place your order.


Order a Similar Paper Order a Different Paper

Problem 3-2 (LO 2) Simple equity method adjustments, consolidated worksheet.

On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. Solar has common stock, other paid-in capital in excess of par, and retained earnings of$50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Solar are as follows:

2015

2016

Net income

$60,000

$90,000

Dividends

20,000

30,000

On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributed to goodwill.

Required

  • 1. Using this information and the information in the following trial balances on December 31, 2016, prepare a value analysis and a determination and distribution of excess schedule:

Paro Company

Solar Company

Inventory, December 31

100,000

50,000

Other Current Assets

136,000

180,000

Investment in Solar Company

400,000

Land

50,000

50,000

Buildingsand Equipment

350,000

320,000

Accumulated Depreciation

(100,000)

(60,000)

Goodwill

Other Intangibles

20,000

Current Liabilities

(120,000)

(40,000)

Bonds Payable

(100,000)

Other Long-Term Liabilities

(200,000)

Common Stock—Paro Company

(200,000)

Other Paid-In Capital in Excess of Par—Paro Company

(100,000)

Retained Earnings—Paro Company

(214,000)

Common Stock—Solar Company

(50,000)

Other Paid-In Capital in Excess of Par—Solar Company

(100,000)

Retained Earnings—Solar Company

(190,000)

Net Sales

(520,000)

(450,000)

Cost of Goods Sold

300,000

260,000

Operating Expenses

120,000

100,000

Subsidiary Income

(72,000)

Dividends Declared—Paro Company

50,000

Dividends Declared—Solar Company

30,000

Totals

0

0

  • 2. Complete a worksheet for consolidated financial statements for 2016. Include columns for eliminations and adjustments, consolidated income, NCI, controlling retained earnings, and consolidated balance sheet.

Problem 3-10 (LO3, 5) 100%, cost method worksheet, several adjustments, third year.

Refer to the preceding information for Paulcraft’s acquisition of Switzer’s common stock. Assume that Paulcraft pays $480,000 for 100% of Switzer common stock. Paulcraft uses the cost method to account for its investment in Switzer. Paulcraft and Switzer have the following trial balances on December 31, 2017 as shown on page 191.

Paulcraft

Switzer

Cash

100,000

110,000

Accounts Receivable

90,000

55,000

Inventory

120,000

86,000

Land

100,000

60,000

Investment in Switzer

480,000

Buildings

800,000

250,000

Accumulated Depreciation

(220,000)

(80,000)

Equipment

150,000

100,000

Accumulated Depreciation

(90,000)

(72,000)

Current Liabilities

(60,000)

(102,000)

Bonds Payable.

(100,000)

Common Stock

(100,000)

(10,000)

Paid-In Capital in Excess of Par

(900,000)

(90,000)

Retained Earnings, January 1, 2017

(315,000)

(182,000)

Sales

(800,000)

(350,000)

Cost of Goods Sold

450,000

210,000

Depreciation Expense—Buildings

30,000

15,000

Depreciation Expense—Equipment

15,000

14,000

Other Expenses

140,000

68,000

Interest Expense

8,000

Dividend Income

(10,000)

Dividends Declared

20,000

10,000

Totals

0

0

Required

  • 1. Prepare a value analysis and a determination and distribution of excess schedule for the investment in Switzer.
  • 2. Complete a consolidated worksheet for Paulcraft Corporation and its subsidiary Switzer Corporation as of December 31, 2017. Prepare supporting amortization and income distribution schedules.

Complete Problem 3-2 and Problem 3-10 using the template attached.

Writerbay.net

Got stuck with a writing task? We can help! Use our paper writing service to score better grades and meet your deadlines.

Get 15% discount for your first order


Order a Similar Paper Order a Different Paper
Writerbay.net